Optional exemption notifications must be chosen before first clearance, but a taxpayer may shift to another eligible exemption later.

An assessee who exercised the option to avail Notification No. 16/97-C.E. at the start of the financial year could not later switch retrospectively to Notification No. 4/97-C.E. from the beginning of that year, because the option under the first notification had to be chosen before the first clearance and could not be withdrawn during the year. However, after exhausting the concessional clearance limit under Notification No. 16/97-C.E., the assessee could move to another beneficial exemption notification under Section 5A(1) of the Central Excise Act, 1944, if the conditions of that notification were met.

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Issues: Whether an assessee who had opted for exemption under Notification No. 16/97-C.E. from the beginning of the financial year could later claim the benefit of Notification No. 4/97-C.E. after crossing the turnover limit.

Analysis: Notification No. 16/97-C.E. is an optional exemption notification, and the option to either avail or not avail its benefit has to be exercised before the first clearance in the financial year and cannot be withdrawn during that year. On that basis, the assessee could not claim Notification No. 4/97-C.E. from the beginning of the financial year after having chosen to operate under Notification No. 16/97-C.E. However, once the assessee had exhausted the concessional clearance limit under Notification No. 16/97-C.E., it was open to move to another beneficial notification under Section 5A(1) of the Central Excise Act, 1944, if the conditions of that notification were satisfied.

Conclusion: The assessee was not entitled to claim Notification No. 4/97-C.E. from the start of the financial year, but was entitled to shift to another eligible exemption notification after crossing the clearance limit under Notification No. 16/97-C.E.

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