2017 (2) TMI 190 - AT - Central Excise

Deanial of SSI exemption - Notification No. 9/2003-CE dt. 1.3.2003 - Held that - we find that the lower authority denied the small scale exemption to the appellant only on the ground that the condition of filing the option letter provided in the notification was not complied with by the appellant - In our view non-filing of option letter is procedural requirement and for the same substantial benefit of SSI exemption cannot be denied to the appellant. The option letter is only intimation to the department and no further action either from the appellant or from the department is required as the said option letter is merely procedural requirement - Appeal allowed.

Summary

Issues:
1. Availing small scale exemption under Notification No. 9/2003-CE.
2. Non-compliance with the condition of filing the option letter.
3. Denial of small scale exemption by lower authorities.
4. Interpretation of substantive and procedural conditions for availing exemption.

Analysis:

1. The appellant availed small scale exemption under Notification No. 9/2003-CE but failed to file the required option for availing the exemption, leading to the denial of the exemption from April 2003 to July 2003. The appellant contended that the non-filing of the option letter was a procedural requirement and should not result in the denial of the substantial benefit of the SSI exemption.

2. The Revenue argued that strict compliance with the conditions of the notification is necessary for availing any exemption and cited relevant judgments to support their stance. The lower authorities upheld the denial of exemption based on the non-compliance with the filing of the option letter, considering it as a violation of the notification's condition.

3. The Tribunal analyzed the situation and observed that the option letter was eventually filed by the appellant, albeit belatedly, on 24.7.2003. The Tribunal differentiated between substantive and procedural conditions for availing exemptions, citing a Supreme Court judgment that highlighted the importance of distinguishing between the two types of conditions.

4. The Tribunal emphasized that the non-filing of the option letter was a procedural lapse rather than a substantive violation that could lead to misuse of the benefit. Drawing on the Supreme Court's distinction between substantive and procedural conditions, the Tribunal concluded that the denial of the SSI exemption based solely on the non-filing of the option letter was unjustified. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

This comprehensive analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's reasoning leading to the final decision in the matter.