Job-work exemption under Notification No. 214/86 excludes returned goods from aggregate clearance value for small-scale exemption limits.

HDPE woven fabrics sent out for job work and received back for further manufacture were treated as exempt clearances under Notification No. 214/86, because the record showed the goods returned and were used in making the final products. Explanation II to Notification No. 1/93 excluded from aggregate clearance value any goods fully exempted under another notification issued under Section 5A of the Central Excises and Salt Act, 1944. On that basis, the value of the job-worked fabrics was not includible for computing the exemption limit under Notification No. 1/93, so the demand based on that inclusion could not be sustained.

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Issues: Whether the value of HDPE woven fabrics sent for job work and received back for further manufacture was includible in the aggregate value of clearances for the exemption limit under Notification No. 1/93.

Analysis: The goods sent for lamination on job work were admittedly received back and used in the manufacture of the final products. Notification No. 214/86 granted exemption to such job-work clearances subject to the prescribed conditions, and the record showed no dispute about receipt back and end-use. Explanation II to Notification No. 1/93 excluded from the aggregate value of clearances any goods exempted from the whole of duty under another notification issued under Section 5A of the Central Excises and Salt Act, 1944. Since the goods were exempted under Notification No. 214/86, their value could not be added for computing the Rs. 30 lakhs limit.

Conclusion: The value of 6,807.9 kgs of HDPE woven fabrics was not includible in the aggregate value of clearances under Notification No. 1/93, and the demand could not survive.

Ratio Decidendi: Where inputs or semi-finished goods are exempted under another notification and are returned from job work for use in further manufacture, their clearance value is excluded from the aggregate turnover computation under Notification No. 1/93 by virtue of its exclusionary explanation.

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