Cenvat credit balance does not bar exemption where no stock remains and no post-option credit is availed.

The exemption under Notification No. 30/2004-C.E. is not denied merely because a carried-forward Cenvat credit balance appears in records when the assessee opts for exemption, if no inputs, semi-finished goods, or finished goods remain in stock on that date and no post-option credit is taken. The relevant condition is aimed at preventing simultaneous availing of credit and exemption, not at disqualifying a taxpayer where the recorded balance is only notional and cannot be used for duty payment after the exemption option is exercised. On that basis, the exemption remains available and the demand, interest, and penalties are unsustainable.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 30/2004-C.E. after opting for exemption, notwithstanding the balance shown in its Cenvat credit records.

Analysis: The condition in the notification was directed against availing credit on inputs while simultaneously claiming exemption, so as to prevent double from credit and exemption. The factual position accepted in the order was that, on the date the option was exercised, there were no inputs, semi-finished goods, or finished goods in stock, and the amount reflected in the records was only a carried-forward balance which was not utilized thereafter. In that situation, the credit could not be put to any use for further duty payment and was to be treated as lapsed on exercise of the exemption option. Since no post-option credit was availed and the balance was only notional, denial of the exemption was not justified.

Conclusion: The assessee was entitled to the benefit of the notification and the demand, interest, and penalties were unsustainable.

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