Chapter-wise exemption classification controls clearances; separate sub-heading bifurcation is not warranted for goods in the same chapter.

For small-scale exemption under Notification No. 175/86, clearances had to be grouped chapter-wise where the goods fell within the same chapter. The mere placement of one product under a different sub-heading within Chapter 73 did not justify item-wise bifurcation of clearances. As the relevant criterion was the chapter classification, no separate split of the two products' clearances was required. The adjudication-based demand for bifurcation was therefore unwarranted, and the assessee's duty position was upheld without further demand on that basis.

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Issues: Whether, for the purpose of the small-scale exemption under Notification No. 175/86, the clearances of the two products were required to be bifurcated item-wise or were to be grouped chapter-wise.

Analysis: The exemption under Notification No. 175/86 was to be administered by grouping clearances of specified goods chapter-wise. Both goods were classified under the same Chapter 73, and the mere change in sub-heading for one item did not create a basis for separate bifurcation of clearances. Since the relevant criterion was the chapter under which the goods fell, no occasion arose to split the clearances between the two products.

Conclusion: The bifurcation demanded in the adjudication was not warranted, and the duty position accepted by the assessee was upheld.

Final Conclusion: The appeal was disposed of by holding that the exemption had to be applied chapter-wise and not by separate sub-heading-wise bifurcation, resulting in no further duty demand on that basis.

Ratio Decidendi: Where an exemption notification is administered chapter-wise, clearances of goods falling within the same chapter cannot be bifurcated merely because they are placed under different sub-headings.

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