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Issues:
Interpretation of Para 2(i) in small scale exemption Notification No. 9/99-C.E., dated 28-2-1999. Analysis: The issue in this appeal pertains to the interpretation of Para 2(i) in the small scale exemption Notification No. 9/99-C.E., dated 28-2-1999. The appellants had initially availed the benefit of this notification up to a certain date in the financial year 1999-2000 and then opted out of the notification. The lower authorities held that once the appellants opted out of the notification, they were not entitled to the exemption from the beginning of the financial year. The exemption under this notification is linked to the value of clearances during a financial year and is subject to various conditions, including the condition stated in Para 2(i. Upon examining the case records and considering the submissions from both sides, the Tribunal noted that the condition in Para 2(i) explicitly states that once a manufacturer opts for the exemption, they cannot withdraw from it during the remaining part of the financial year. Therefore, withdrawing from the scheme would result in the violation of a condition stipulated in the notification, making the manufacturer ineligible for the exemption from the beginning of the financial year. The Tribunal emphasized that the exemption is financial year-based, and strict adherence to the conditions of the scheme is necessary. The Tribunal referenced previous decisions and highlighted that the small scale exemption notification like No. 9/99 required a manufacturer to either avail the exemption for the entire year or pay the normal duty and utilize Modvat credit on the input duty. Allowing manufacturers to avail clearance-based exemption for a part of the financial year and then opt out would lead to undue benefits and disrupt the scheme. The Tribunal concluded that the appellants had two options: either avail the small scale exemption for the entire financial year or work outside the scheme for the entire year if more beneficial. The appellants were not permitted to switch between the scheme and non-scheme periods within the same financial year. Ultimately, the Tribunal dismissed the appeal but granted the appellants the opportunity to request the original authorities to continue under the exemption notification beyond the date they had initially opted out until the end of the financial year. The original authorities were advised to consider such requests sympathetically, despite the appellants' prior withdrawal from the scheme. In conclusion, the Tribunal upheld the strict application of the conditions outlined in the small scale exemption Notification No. 9/99 and clarified the limitations on manufacturers once they opt for or withdraw from such exemptions during a financial year.
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