SSI exemption option under Chapter 29 goods barred later exemption claim for organic chemicals after duty-paid bulk drug clearances.

A manufacturer who exercised the option under para 4 of Notification No. 1/93-C.E. not to avail SSI exemption and paid duty on bulk drugs under Notification No. 8/95-C.E. could not claim the same SSI benefit for later clearances of other Chapter 29 goods. The reasoning was that both bulk drugs and organic chemicals fell within the same chapter, and the prior duty-paying option applied to subsequent clearances of specified goods in that financial year. The exemption for the organic chemicals was therefore unavailable, and its denial was upheld.

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Issues: Whether the assessee was entitled to Small Scale Industry exemption under Notification No. 1/93-C.E. for organic chemicals when it had opted to pay duty on bulk drugs under Notification No. 8/95-C.E.

Analysis: Paragraph 4 of Notification No. 1/93-C.E. permits a manufacturer to exercise an option not to avail the exemption and requires duty at the applicable rate on all subsequent clearances of specified goods made after such option in the relevant financial year. Both bulk drugs and organic chemicals fell within Chapter 29, and the assessee had already cleared bulk drugs on payment of duty under Notification No. 8/95-C.E. The option thus operated to disqualify the assessee from claiming the SSI benefit for the subsequent clearances of the other Chapter 29 goods.

Conclusion: The assessee was not entitled to the SSI exemption under Notification No. 1/93-C.E. for the organic chemicals, and the denial of the exemption was upheld.

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