Clearance-based exemption under excise law allows unused balance within the limit to be adjusted against the value cleared.

Notification No. 175/86-C.E. granted exemption by reference to the value of clearances up to a monetary limit in a financial year. Where the assessee had a balance amount still available within that limit at the time of a clearance, that balance could be adjusted against the value of the goods cleared. The exemption operated on the value of clearances, not on the quantity of goods, so duty was not payable on the entire clearance value when part of that value remained covered by the available exemption balance.

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Issues: Whether, for clearances made under Notification No. 175/86-C.E. dated 1-3-1986, the assessee was entitled to deduct the balance amount left within the exemption limit from the total value of the goods cleared on the relevant date, instead of paying duty on the full clearance value.

Analysis: The notification granted exemption with reference to the value of goods cleared and provided a monetary exemption limit for first clearances in a financial year. On the facts, the assessee had only a balance amount of Rs. 17,425 remaining within the limit when the clearance of Rs. 54,500 was made. Since the exemption operated on the value of clearances and not on the quantity of goods, the balance available under the exemption could be adjusted against the value of that clearance.

Conclusion: The assessee was entitled to deduct the balance exemption amount from the clearance value, and duty was not payable on the full value of the goods cleared.

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