Small-scale exemption cannot be denied for mistaken full-duty clearances where excess duty was refunded and option was already exercised.

Once a manufacturer opts for a small-scale exemption notification, the benefit cannot be denied for the same financial year merely because some clearances were made at full duty by mistake. The excess duty paid on those clearances had been refunded, and that factual position did not justify withdrawal of the exemption. The notification's condition prohibited withdrawal from its operation during the year, not denial of relief because of an inadvertent payment at the normal rate. The exemption was therefore held available for the relevant financial year.

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Issues: Whether denial of the benefit of small-scale exemption under Notification No. 9/2000 was sustainable when the manufacturer had already opted for the notification, cleared some goods on full duty by mistake, and the excess duty was refunded.

Analysis: The appellants had opted for the small-scale exemption with effect from 1-4-2000. The record showed that some clearances were made at the normal rate of duty due to mistake, but the duty paid in excess was claimed as refund and such refund was sanctioned. The condition of the notification was that once the manufacturer opted for its benefit, the manufacturer could not withdraw from its operation during the same financial year. On these facts, the payment of duty at the normal rate did not justify denial of the exemption, particularly when the excess duty had been returned by the Revenue.

Conclusion: The denial of small-scale exemption was not sustainable and was set aside.

Final Conclusion: The appeal succeeded and the assessee was held entitled to the benefit of the small-scale exemption notification for the relevant financial year.

Ratio Decidendi: Once a manufacturer has opted for a small-scale exemption notification, the benefit cannot be denied for the same financial year merely because some clearances were made on full duty by mistake, especially where the excess duty has been refunded.

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