Specified goods under an incentive notification do not include raw materials used in manufacture; clearance computation excludes only the final goods identified.

For Condition No. (vi) of Notification No. 283/82-C.E., the expression "specified goods" was confined to the final products identified in Table A and did not extend to raw materials used in their manufacture. The notification required deduction only of specified goods received from outside the factory for manufacture of those goods during the relevant period. Excluding raw materials from clearance computation was therefore unwarranted, because that reading would distort the incentive scheme and lead to an absurd result. The Tribunal's construction was upheld, and the claim that raw material purchases had to be deducted for incentive entitlement was rejected.

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Issues: Whether, for the purpose of Condition No. (vi) of Notification No. 283/82-C.E. dated 27-11-1982, the expression "specified goods" includes raw materials received from outside the factory and used in the manufacture of the final product, so as to require their exclusion while computing clearances for the base period or incentive period.

Analysis: The relevant condition required deduction only of the quantity of the specified goods received in the factory from outside during the base period or incentive period for the manufacture of the said specified goods. The expression "specified goods" in the notification referred to the goods described in Table A, namely the final product covered by the incentive scheme, and not the raw material used for manufacturing that product. Treating raw material as "specified goods" would defeat the object of the incentive notification and produce an irrational result, including negative excess production. Such an interpretation was therefore rejected on the plain language of the notification and on the principle that a construction leading to absurdity should be avoided.

Conclusion: The condition did not authorise exclusion of raw materials from the clearance computation, and the Revenue's reference application failed.

Final Conclusion: The construction adopted by the Tribunal was upheld, and the claim that raw material purchases had to be deducted for working out incentive entitlement under the notification was rejected.

Ratio Decidendi: In an incentive notification, the expression "specified goods" must be construed according to the goods actually identified in the notification, and not expanded to include raw materials where such expansion would defeat the scheme and lead to an absurd result.

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