Exemption notification computation clause excludes fully exempt clearances from aggregate value for eligibility under the small-scale exemption

Explanation II to Notification No. 175/86-C.E. governed the computation of "aggregate value" wherever that expression was used in the notification, including Para 3. On that construction, clearances of capacitors that were fully exempt under Notification No. 74/85-C.E. could not be included in the preceding financial year's aggregate value for eligibility. The exemption-computation clause therefore applied to the eligibility condition in Para 3, and the excluded clearances were not to be counted for determining entitlement under Notification No. 175/86-C.E.

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Issues: Whether Explanation II to Notification No. 175/86-C.E. applied to the eligibility condition in Para 3 so as to exclude, from the preceding financial year's aggregate value of clearances, goods that had been fully exempted under another notification.

Analysis: The expression "aggregate value" appears not only in Para 1 but also in Para 3 of Notification No. 175/86-C.E., and Explanation II lays down the method for computing that aggregate value under the notification. The exclusion in Explanation II therefore governs any part of the notification where the same expression is used. Since capacitors were fully exempt under Notification No. 74/85-C.E. for the relevant period, those clearances were not liable to be counted for determining the preceding financial year's aggregate value under Para 3.

Conclusion: The exclusion under Explanation II applied to Para 3, the exempt clearances under Notification No. 74/85-C.E. could not be counted, and the appellant was entitled to the benefit of Notification No. 175/86-C.E.

Ratio Decidendi: A computation clause in an exemption notification applies wherever the notification uses the same expression for determining aggregate value of clearances, and fully exempt clearances covered by another notification are excluded from that computation.

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