2017 (11) TMI 865 - AT - Central Excise

SSI Exemption - whether the appellant-assessee who is engaged in the manufacture of Iron and Steel products and who was paying duty on their clearances at normal rate whether they can opt for exemption with effect from 06 May, 2006 under N/N. 8/2003 CE dated 01.03.2003? - Held that - although it is mentioned in Clause 2(i) that the option has to be made in writing for not availing the exemption. Admittedly, the appellant have not filed any option not to avail the exemption prior to 06 May, 2006, when they opted to avail the exemption. Further sub Clause (e) and (f) of sub-clause (ii) of Rule 2 of the said notification, gives option to the assessee to specify the date from which option under the notification has been exercised and also to give details or the aggregate value of clearances of services or goods till the date of exercising option. The SSI Exemption is available to the appellant assessee with effect from 06 May, 2006 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant-assessee engaged in the manufacture of Iron and Steel products paying duty at normal rate can opt for exemption under Notification No.8/2003 CE dated 01.03.2003 from 06 May, 2006.
2. Interpretation of condition number 2(i) of the said notification regarding the timing of exercising the option for exemption.
3. Analysis of the procedural and substantive parts of the notification and the effect of not availing the exemption at the start of a financial year.
4. Consideration of the appellant's argument that the option under Notification No.8/2003 is automatic and the relevance of the information required under sub-Clause (ii) of Clause 2.
5. Comparison of the present case with a previous ruling in Surat Metallics Pvt. Ltd. v/s CCE & ST regarding the exercise of option for exemption under similar circumstances.

Analysis:
1. The issue in this appeal revolved around the appellant-assessee's eligibility to opt for exemption under Notification No.8/2003 CE dated 01.03.2003 from 06 May, 2006, despite initially paying duty at the normal rate. The Revenue alleged that the appellant did not exercise the option at the start of the financial year, leading to a demand on the value of clearances made during June 2006 to March 2007.
2. The Commissioner (Appeals) observed that the appellant had not filed any intimation to the Department regarding the exemption but had paid duty for April and May 2006, indicating the choice not to avail the SSI Exemption. The Commissioner held that the appellant should have opted for the exemption before the first clearances, as per the proviso to Rule 8(1) of CER, 2002, emphasizing the importance of timely action in availing exemptions.
3. The appellant argued that the option under Notification No.8/2003 is automatic, as per the wording of Clause 2(i), and highlighted the requirements under sub-Clause (ii) of Clause 2 for providing specific information upon exercising the option. The Tribunal noted that the appellant had not made any written option before 06 May, 2006, but the notification allowed for specifying the date of exercising the option and the aggregate value of clearances till that date.
4. Referring to a previous case, the Tribunal emphasized the mandatory nature of the condition to exercise the option for availing the exemption under the notification. The condition was deemed essential for eligibility for the exemption benefit, and compliance with the requirement was necessary for claiming the exemption.
5. Ultimately, the Tribunal held that the SSI Exemption was available to the appellant with effect from 06 May, 2006, based on a harmonious reading of the notification. The appeal was allowed, setting aside the impugned order, and granting the appellant consequential benefits in accordance with the law.