Small scale industries exemption survives intermittent duty payments where aggregate clearances remain within the threshold limit.

Intermittent payment of central excise duty on some clearances does not, by itself, amount to opting out of a small scale industries exemption when the aggregate clearances for the relevant period remain within the prescribed threshold. The Tribunal noted that the clearances stayed below the exemption limit and that the show cause notice reflected the same factual position. On that basis, it held that differential duty could not be demanded merely because duty had been paid on certain consignments. The demand was therefore unsustainable and the exemption continued to apply.

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Issues: Whether the appellant was liable to pay differential central excise duty on the footing that, by paying duty on some clearances, it had opted out of the Small Scale Industries exemption under Notification No. 34/2003 as amended by Notification No. 47/2003.

Analysis: The clearances for the relevant periods were found to remain below the threshold limit, and the show cause notice itself reflected that position. The Tribunal held that where the aggregate clearances during the period stay within the exemption limit, duty liability cannot arise merely because duty was paid intermittently on some consignments. Such intermittent payment does not amount to an election to abandon the small scale exemption, and the view was supported by earlier tribunal decisions applying the same principle.

Conclusion: The demand was unsustainable and the impugned order was set aside.

Final Conclusion: The appeals succeeded because the exemption remained available and partial duty payment on certain clearances did not amount to opting out of the exemption scheme.

Ratio Decidendi: Intermittent payment of duty on some clearances does not by itself amount to opting out of a small scale industries exemption when the aggregate clearances for the relevant period remain within the prescribed threshold limit.

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