Small scale exemption remains available despite isolated duty-paid clearances without express abandonment of the notification.

Isolated duty-paid clearances made while otherwise availing a small scale exemption did not amount to opting out of the exemption notification, because there was no clear, express and future-facing abandonment of the benefit for the remaining financial year. On that footing, the demand and penalty were not sustainable, as the intermittent duty-paid clearances were treated as inconsistent with a concluded waiver of the exemption and did not prejudice revenue. The revenue appeal failed and the order setting aside the adjudication was affirmed.

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Issues: Whether occasional clearances made on payment of duty during the period of availing small scale exemption could be treated as opting out of the exemption notification, and whether the demand and penalty were sustainable.

Analysis: The assessee was otherwise availing exemption under Notification No. 9/98-CE. Some clearances were made on full payment of duty, and those clearances were also included while computing the exemption limit. No written intimation or clear, future-facing decision to abandon the exemption for the remainder of the financial year was given. On that basis, intermittent duty-paid clearances were treated as inconsistent with a conclusion that the assessee had opted out of the notification. The demand was also viewed as not justified where the duty-paid clearances did not prejudice revenue.

Conclusion: The intermittent payment of duty did not amount to opting out of the exemption notification, and the demand and penalty were not sustainable.

Final Conclusion: The revenue appeal failed and the order setting aside the adjudication was affirmed.

Ratio Decidendi: Isolated duty-paid clearances, without a clear and express abandonment of the exemption for the future, do not constitute opting out of a small scale exemption notification.

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