Alternative exemption relief may carry its attached conditions, including reversal of Modvat credit, when the assessee seeks that benefit.

An assessee who first availed one exemption notification and later sought a different exemption could not accept continuation of the earlier benefit on a selective basis. The appellate authority allowed the alternative relief only with the attached condition that Modvat credit earlier availed be reversed. That condition was upheld because it formed part of the exemption benefit the assessee itself sought, and it was not necessary that the show cause notice had originally proposed that consequence.

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Issues: Whether the appellant could challenge the condition requiring reversal of credit while being allowed to continue under the earlier exemption notification, when that continuation was sought as an alternative relief and not as the subject matter of the original dispute.

Analysis: The appellant was found to have first availed Notification No. 16/97-C.E. and later sought to avail Notification No. 38/97-C.E., which was denied for non-fulfilment of the declaration condition. In appeal, the appellant accepted that Notification No. 38/97-C.E. was unavailable and sought continuation under Notification No. 16/97-C.E. The appellate authority accepted that alternative prayer, but only on the basis that the appellant would satisfy the condition attached to the earlier exemption, namely that the Modvat credit earlier availed must be reversed. Since the continuation of the earlier notification was granted as a concession on the appellant's own alternative plea, the condition could validly accompany that relief even though the show cause notice had not originally proposed such reversal.

Conclusion: The condition requiring reversal of credit was upheld and the challenge to it failed.

Final Conclusion: The appeal was rejected because the assessee could not retain the benefit of the earlier exemption notification without complying with the condition attached to its continued availment.

Ratio Decidendi: Where an assessee seeks and obtains an alternative exemption benefit, the authority may lawfully impose the conditions inherent to that benefit even if such consequence was not expressly proposed in the original show cause notice.

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