Conditional small-scale exemption under Notification No. 1/93-C.E. does not bar duty demand where clearance conditions are unmet.

Notification No. 1/93-C.E. was not an unconditional exemption up to the specified clearance limit because paragraph 3 imposed a further condition on the aggregate value of clearances of excisable goods consumed directly by the manufacturer or removed from the factory. As the assessee did not show compliance with that condition, the Modvat credit-based duty demand could not be treated as unsustainable on the ground that the exemption was absolute. The operative effect is that the exemption remained conditional, and the demand was not liable to be interfered with on that basis.

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Issues: Whether the exemption under Notification No. 1/93-C.E. was unconditional so as to bar the demand raised on the Modvat credit taken by the assessee.

Analysis: The notification was held not to grant unconditional exemption up to the specified clearance limit. Paragraph 3 of the notification imposed a condition relating to the aggregate value of clearances of excisable goods consumed directly by the manufacturer or removed from the factory, and the assessee had not shown compliance with that condition. The demand based on the Modvat credit was therefore not unsustainable on the ground urged.

Conclusion: The exemption was conditional, and no ground was made out to interfere with the duty demand.

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