Selective SSI exemption under Notification 8/99-C.E. was impermissible; alternative relief under Notification 9/99-C.E. could still apply.

A manufacturer claiming SSI exemption under Notification No. 8/99-C.E. had to exercise the written option for the exemption scheme before the first clearances, and the option could not be withdrawn during the financial year. Read as a whole, the notification did not allow selective exemption for only some goods while others were cleared on normal duty; splitting the specified goods into exempted and non-exempted categories was impermissible. Where that exemption was denied, the alternative benefit of Notification No. 9/99-C.E. could still be considered, requiring fresh determination of duty and recomputation on remand.

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Issues: (i) Whether a manufacturer could avail SSI exemption under Notification No. 8/99-C.E. only in respect of some of the goods manufactured and pay duty at the normal rate on the remaining goods; (ii) whether, after denial of Notification No. 8/99-C.E., the assessee could be extended the benefit of Notification No. 9/99-C.E. and the matter remitted for recomputation of duty.

Issue (i): Whether a manufacturer could avail SSI exemption under Notification No. 8/99-C.E. only in respect of some of the goods manufactured and pay duty at the normal rate on the remaining goods.

Analysis: The notification required a manufacturer intending to avail the exemption to exercise a written option before the first clearances and prohibited withdrawal during the financial year. The text of the notification was read as a whole to mean that the option had to be exercised for the exemption scheme itself and not selectively for only certain commodities. The Tribunal held that the notification did not permit splitting the specified goods into exempted and non-exempted categories at the assessee's choice.

Conclusion: The selective availment of Notification No. 8/99-C.E. was not permissible and the issue was decided against the assessee.

Issue (ii): Whether, after denial of Notification No. 8/99-C.E., the assessee could be extended the benefit of Notification No. 9/99-C.E. and the matter remitted for recomputation of duty.

Analysis: The Tribunal accepted the alternative plea that once the benefit of Notification No. 8/99-C.E. was denied, the assessee could not be said to have validly chosen to remain outside the exemption scheme so as to be deprived of the alternative notification. The duty liability therefore required fresh determination on the footing that the benefit of Notification No. 9/99-C.E. could be considered.

Conclusion: The assessee was held entitled to the benefit of Notification No. 9/99-C.E. on remand, and the issue was decided in favour of the assessee.

Final Conclusion: The denial of selective SSI exemption under Notification No. 8/99-C.E. was upheld, but the matter was sent back for recomputation after considering exemption under Notification No. 9/99-C.E.

Ratio Decidendi: Where an exemption notification requires a written option to be exercised before first clearance, the manufacturer cannot split the exemption between different goods unless the notification expressly permits such selective availment.

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