Exemption option under excise law lets an assessee choose the applicable notification instead of mandatory captive consumption exemption.

Where two exemption routes are available, and the applicable notification gives the assessee an option, the assessee cannot be compelled to adopt captive consumption exemption. For captively used polyjars covered by Notification No. 9/2002-C.E., the assessee was entitled to pay duty under that notification, take credit of the duty paid, and use the credit for the final product. The captive consumption exemption under Notification No. 10/96-C.E. was therefore not mandatory, and the Revenue could not insist on its compulsory application. The settled principle is that a taxpayer may choose the statutory route expressly permitted by the relevant exemption notification.

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Issues: Whether the assessee could opt to pay duty under Notification No. 9/2002-C.E. in respect of captively used polyjars instead of being compelled to avail captive consumption exemption under Notification No. 10/96-C.E.

Analysis: Polyjars were one of the specified items covered by Notification No. 9/2002-C.E., and the assessee had chosen to pay duty on the goods, take credit of the duty paid, and utilize it for payment on the final product. The exemption for captive consumption was not mandatory, and the assessee could not be forced to adopt a particular exemption notification when the governing notification gave an option. The settled principle applied was that where an exemption notification is available, the assessee cannot be compelled to avail it and may choose the alternative statutory route permitted by the notification.

Conclusion: The assessee was entitled to opt for Notification No. 9/2002-C.E., and the Revenue's objection failed.

Ratio Decidendi: When two exemption routes are available and the applicable notification confers an option, the assessee cannot be compelled to avail captive consumption exemption and may choose to pay duty under the notification applicable to the goods manufactured.

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