Export duty on Nepal clearances did not forfeit later exemption; exports were counted only for slab computation.

Export clearances to Nepal did not amount to an exercise of the option under Notification No. 1/93-CE para 4, because para 1 applies only to clearances for home consumption and the explanation merely includes exports to Bhutan or Nepal for slab computation. Payment of duty on such exports therefore did not convert them into home-consumption clearances by deeming fiction, so the assessee remained eligible for exemption on subsequent domestic clearances in the same financial year.

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Issues: Whether export clearances to Nepal at full rate of duty amounted to an exercise of the option under para 4 of Notification No. 1/93-CE so as to deny the assessee the benefit of exemption on subsequent clearances in the same financial year.

Analysis: Para 4 of Notification No. 1/93-CE applies where a manufacturer opts not to avail the exemption contained in para 1 and instead pays duty on the specified goods covered by that paragraph. Para 1, however, grants exemption only to clearances for home consumption. Explanation (v) states that, for the purposes of the notification, clearances for home consumption shall also include clearances for export to Bhutan or Nepal. The Tribunal held that this explanation does not convert export clearances into clearances for home consumption by a deeming fiction; it only requires export clearances to Bhutan or Nepal to be counted for computing the slab benefit under the notification. Since export goods are not covered by para 1, payment of duty on such exports does not amount to an option under para 4.

Conclusion: Export clearances to Nepal did not disable the assessee from claiming exemption on subsequent domestic clearances under Notification No. 1/93-CE, and the Revenue's appeal failed.

Ratio Decidendi: An exemption notification limited to clearances for home consumption cannot be denied on the basis of duty paid on exports to Nepal or Bhutan where the relevant explanation merely includes such exports for slab computation and does not deem them to be home consumption.

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