First clearances under Notification No. 175/86-C.E. must be counted chronologically across the aggregate value of clearances.

Under Notification No. 175/86-C.E., the exemption on "first clearances" was to be applied to the aggregate value of clearances in chronological order. The Tribunal followed the Larger Bench interpretation and held that the full exemption ceiling and the balance limit must be worked out within that aggregate, so clearances could not be excluded merely because duty had been paid on some goods or because different tariff headings were involved. Applying that construction, the Tribunal accepted the assessee's claim and rejected the Revenue's challenge.

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Issues: Whether, under Notification No. 175/86-C.E., a manufacturer of specified goods could claim full exemption for one set of clearances while availing Modvat credit in respect of another item manufactured in the same factory, and whether the first clearances had to be reckoned sequentially in chronological order.

Analysis: The Tribunal applied the Larger Bench ruling on the meaning of "first clearances" in Notification No. 175/86-C.E. and held that the exemption operates on the aggregate value of first clearances in chronological order. It further held that the ceiling of full exemption and the balance limit under the notification are to be reckoned within that aggregate, and clearances cannot be excluded merely because duty was paid on some goods or because different headings were involved. Following that interpretation, the earlier view supporting the assessee was treated as covering the present dispute.

Conclusion: The Revenue's challenge failed, and the assessee was entitled to the exemption as claimed.

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