2005 (1) TMI 432 - AT - Central Excise

Summary

Issues:
Classification under Notification No. 1/93-C.E. for small-scale exemption, applicability of Paragraph 4 of the notification, payment of duty on bulk drugs at full rate instead of concessional rate, mistake in payment of duty, appeal against the order of the Assistant Commissioner, decision of the Commissioner (Appeals), interpretation of "opting out" of exemption benefit, restoration of original adjudicating authority's order.

Analysis:
The appellants, engaged in manufacturing Organic Compounds and Bulk Drugs, claimed small-scale exemption under Notification No. 1/93-C.E. for both products. However, during a specific period, they mistakenly paid full duty on bulk drugs instead of availing the concessional rate as per their classification list. The issue arose when they were asked to pay full duty for Organic Compounds based on Paragraph 4 of the notification, which states that once a manufacturer opts out of the exemption, they cannot opt for it again in the same financial year.

The Assistant Commissioner initially accepted the appellants' explanation that the full-duty payment was a mistake by a newly appointed employee, resulting in more duty paid overall. However, the Commissioner (Appeals) set aside this decision, leading to the present appeal. The Tribunal analyzed the situation, emphasizing that "opting out" of the exemption requires a conscious decision by the assessee, which was not the case here. The Tribunal concluded that the appellants had not opted out of the exemption, as evidenced by their classification list, and the full-duty payment was an error, not a deliberate choice.

Therefore, the Tribunal found the original adjudicating authority's order appropriate and set aside the Commissioner (Appeals) decision, restoring the original order. The appeal was allowed in favor of the appellant, providing consequential relief. The judgment clarified the distinction between opting out of an exemption and a mistake in duty payment, ensuring the correct application of the relevant notification and exemption benefits for the appellant's products.