Exemption notification conditions must be fully satisfied; selective claiming of benefit cannot trigger a reverse duty demand.

Failure to satisfy the conditions of Notification No. 245/83 meant the exemption could not be selectively claimed for some clearances while denied for others. The condition required the assessee to claim the benefit for all medicines cleared, and partial availing amounted to breach of the notification. In that situation, the proper legal consequence was denial of the exemption altogether, with duty payable on the assessable value under Section 4 of the Central Excise Act, 1944. The department could not demand duty on a reverse basis only for the clearances where exemption was not claimed.

---

---

Issues: Whether, on failure to satisfy the condition of Notification No. 245/83, the department could demand duty only on the clearances in respect of which the exemption was not claimed, or whether the proper consequence was denial of the exemption benefit altogether.

Analysis: The condition in the exemption notification required the assessee to claim the benefit in respect of all medicines cleared by it. The assessee had availed the notification for some clearances but not for others, thereby breaching the condition. In such a case, the legal consequence is not to compel application of the notification against the manufacturer's wishes for selected clearances. If the condition is not fulfilled, the exemption fails and duty becomes payable on the assessable value under Section 4 of the Central Excise Act, 1944 without the benefit of the notification.

Conclusion: The department's approach of demanding duty on the reverse basis was illegal; the assessee was entitled to denial of the notification benefit rather than the imposition of duty in the manner adopted in the impugned order.

---