Small scale industry exemption survives a technical declaration lapse where written intent to continue the benefit is shown.

Eligibility for small scale industry exemption was not defeated by the failure to file a separate declaration where the assessee had already expressed in writing its intention to continue availing the benefit. The commentary treats the omission as a technical procedural lapse, not a substantive condition, and states that the department had to establish the duty demand on the basis of the notification and the existing entitlement. On that reasoning, duty, penalty and interest were held unsustainable, and the exemption benefit was preserved.

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Issues: Whether the appellant was liable to duty demand, penalty and interest for not filing a separate declaration while availing the small scale industry exemption and concessional rate of duty under the notification.

Analysis: The appellant had already indicated in writing its intention to continue availing the exemption, and the demand was founded on a technical objection regarding absence of a separate declaration. The notification requirement was treated as satisfied where the entitlement to exemption otherwise existed and the intent to continue the benefit was shown in writing. The burden remained on the department to establish the duty demand, and the procedural lapse did not justify denial of the exemption benefit.

Conclusion: The demand of duty, penalty and interest was unsustainable and the issue was decided in favour of the appellant.

Final Conclusion: The appeal succeeded and the impugned demand and consequential liabilities were set aside.

Ratio Decidendi: Where eligibility to exemption is otherwise established and the assessee's written conduct shows an intention to continue availing the benefit, a merely technical failure to file a separate declaration does not defeat the exemption claim.

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