2014 (3) TMI 162 - AT - Central Excise

Duty demand - Benefit of exemption notification No. 9/98-CE dated 2.6.98 - Revenue contends that as in between availing small scale exemption notification, the assessee was clearing goods on full payment of duty, which is not permissible inasmuch as after opting for availing the small scale notification an assessee cannot opt out of the same - Held that - if certain clearances in between are made on full payment of duty, it cannot be as opting out of held notification. The opting out of exemption notification means that an assessee intend to clear all future goods on payment of duty and accordingly inform the revenue, in writing, that they, from that date onwards, would not avail the benefit of the small scale notification in that particular number financial year. Admittedly, this has not been done by the assessee and as such, has to be held that they have not opted out of the notification - few clearances made in the beginning of the financial year on payment of normal duty pending determination whether clearances of the previous year had exceeded the prescribed limit could not the considered as de-fectow opting out of the exemption while was required to the in specific terms in view of proviso to Notification No 1/93-CE - Following decision of Ankit Packaging Ltd. Vs. CCE, Hyderabad 2003 (12) TMI 86 - CESTAT, NEW DELHI - Decided against Revenue.

Summary

Issues:
1. Whether the appellant can opt out of small scale exemption notification after availing it within the same financial year.
2. Whether clearing goods on full payment of duty in between availing small scale exemption notification constitutes opting out of the notification.
3. Whether the revenue's contention that the appellant cannot opt out of the notification is valid.
4. Whether the appellant's actions were in the interest of revenue and did not contravene the provisions of the exemption notification.

Analysis:
Issue 1: The appellant availed the benefit of small scale exemption under Notification No. 9/98-CE but later started clearing goods at concessional rates after exhausting the exemption limit. The revenue contended that once the appellant opts for the small scale notification, they cannot opt out of it. The Commissioner (Appeals) analyzed the situation and allowed the appeal, stating that if opting out from the exemption notification benefits the government revenue, it is allowed. The appellant's actions were deemed to be in the interest of revenue.

Issue 2: The revenue argued that the appellant cannot opt out of the exemption notification and should have continued clearing goods without payment of duty. However, the appellate authority noted that the revenue's stance was against the interest of revenue. The appellant included clearances made on full payment of duty while computing the exemption value of Rs. 50 lacs, indicating that they did not opt out of the notification.

Issue 3: The appellate tribunal found that the appellant did not opt out of the exemption notification as they did not inform the revenue in writing about their intention to clear all future goods on payment of duty. The tribunal referred to a previous case where clearances made on full payment of duty at the beginning of the financial year were not considered as opting out of the exemption. Therefore, the revenue's contention was rejected.

Issue 4: The Commissioner (Appeals) set aside the order of the Deputy Commissioner, stating that the appellant did not contravene the provisions of the exemption notification or Rule 173-F. The appellant's actions were considered to be in the interest of public revenue, and there was no malafide intention in determining and paying the duty to the government exchequer. The tribunal found no infirmity in the Commissioner (Appeals) order and rejected the revenue's appeal.