Small scale exemption under Notification 175/86-C.E. depends on aggregate first clearances, not chapter-wise denial.

For small scale exemption under Notification No. 175/86-C.E., clearances are to be computed by reference to the aggregate value of first clearances of specified goods, not by denying exemption across all chapters once goods under one chapter exceed the limit. The exemption continues for clearances under other chapters until the overall ceiling for first clearances is exhausted. On the stated facts, the respondents' clearances under all chapters did not cross the prescribed aggregate limit, so the exemption remained available and the Revenue's challenge failed.

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Issues: Whether, for the purpose of Notification No. 175/86-C.E. dated 1-3-1986, clearances under different chapters of the Central Excise Tariff were to be aggregated so as to deny exemption once the clearances under one chapter exceeded the prescribed limit, or whether the exemption continued for other chapters until the overall ceiling for first clearances was reached.

Analysis: The applicable exemption notification had to be computed on the basis of the value of first clearances of specified excisable goods, and the legal position stood settled by the Apex Court that where clearances of goods under one heading exceeded the relevant limit, the clearances of other specified goods continued to enjoy the benefit until the aggregate ceiling for first clearances was exhausted. On the facts, the respondents' clearances under all chapters did not exceed the overall limit prescribed by the notification.

Conclusion: The benefit of the exemption was available to the respondents for the other chapter clearances, and the Revenue's challenge failed.

Ratio Decidendi: For the purpose of the small scale exemption under Notification No. 175/86-C.E., the relevant computation is of the aggregate first clearances of specified goods, and exemption cannot be denied to clearances under other chapters until the overall ceiling is crossed.

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