Conscious opt-out from small-scale exemption requires a clear deliberate election; mistaken duty payment does not forfeit the benefit.

Under Notification No. 1/93-C.E., paragraph 4 applies only where a manufacturer consciously and deliberately elects to forgo the small-scale exemption. Mere payment of duty at the normal rate on one product for a limited period, while the classification list continued to claim exemption for both products, was treated as an inadvertent error and not as a clear opt-out. On that basis, the restriction in paragraph 4 was not attracted, the assessee was held not to have opted out of the exemption, and relief followed by restoring the original adjudicating authority's order.

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Issues: Whether payment of duty at the normal rate on one product for a limited period, despite a classification list claiming small-scale exemption for both products, amounted to an exercise of option to opt out of the exemption under Notification No. 1/93-C.E.

Analysis: Paragraph 4 of Notification No. 1/93-C.E. applies only where the manufacturer consciously elects not to avail the exemption. An option necessarily implies a deliberate choice, and such choice must be clearly manifested. Mere payment of duty at the normal rate on one product, when the classification list continued to claim exemption for both products, was held to be an inadvertent error by the assessee and not a conscious opt-out. The relevant conduct therefore did not attract the restriction in paragraph 4.

Conclusion: The assessee did not opt out of the exemption. The impugned order of the Commissioner (Appeals) was set aside and the order of the original adjudicating authority was restored, resulting in relief to the assessee.

Ratio Decidendi: For the purpose of an exemption notification, an option to forego the benefit must be a conscious and deliberate election and cannot be inferred from a mistaken payment of duty contrary to a classification list claiming the exemption.

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