Small scale exemption cannot be denied for a mistaken duty-paid invoice without clear proof of conscious opt-out.

Small scale industry exemption could not be denied merely because the first invoice was mistakenly issued showing duty payment instead of nil duty under the exemption notification. The entitlement to the exemption was not disputed, and the initial invoice was later corrected by issuing a revised invoice showing nil duty; the duty reflected in the first invoice and the buyers' Cenvat credit were also reversed. On these facts, the mistaken invoice did not prove a clear and conscious decision to opt out of the exemption. The material point was that exemption is available unless expressly abandoned, so denial of the benefit of Notification No. 8/99-C.E. was unjustified.

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Issues: Whether the appellant could be denied small scale exemption merely because the first invoice was mistakenly raised showing payment of duty instead of nil rate of duty under the exemption notification.

Analysis: The entitlement to the small scale exemption was not in dispute. The only objection was that the first invoice reflected duty payment, which according to Revenue showed a conscious choice to clear the goods on duty and not to avail the exemption. The invoice was, however, subsequently corrected by issuing another invoice showing nil duty. The duty reflected in the first invoice and the Cenvat credit taken by buyers were also reversed. The exemption being available automatically unless consciously opted out of, a mistaken initial invoice could not by itself establish an informed abandonment of the exemption. The view was also supported by the principle that initial clearances at full duty do not, by themselves, defeat the SSI exemption for the entire period.

Conclusion: The denial of SSI exemption was unjustified and the benefit of Notification No. 8/99-C.E. could not be withheld from the appellant.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: A small scale exemption cannot be denied merely because an initial invoice was mistakenly issued on payment of duty, unless there is a clear and conscious decision to opt out of the exemption.

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