Exemption choice for 100% EOU clearances: assessee may opt for the more beneficial notification, defeating the demand.

Where a 100% EOU clears goods into the domestic tariff area, it may choose the more beneficial of two available exemption notifications. The settled principle applied was that, if both notifications are open to the assessee, the assessee can claim the one that offers the greater benefit. A Board circular dated 23.03.1998 recognised this option between Notification No. 8/97-C.E. and Notification No. 55/91-C.E., and the later clarification dated 19.10.2000 was treated as not displacing that position. The demand was therefore not sustainable.

---

---

Issues: Whether a 100% EOU clearing goods into the domestic tariff area could opt for the more beneficial exemption notification and whether the demand could be sustained when the assessee had chosen one of two available notifications.

Analysis: The dispute turned on the availability of two exemption notifications governing clearances by a 100% EOU and the settled principle that, where both are available, the assessee may choose the one more beneficial to it. The Board circular of 23.03.1998 also clarified that an assessee could claim exemption either under Notification No. 8/97-C.E. or Notification No. 55/91-C.E. The earlier clarification dated 19.10.2000 was held not to govern the issue in view of the Tribunal and Supreme Court rulings recognising the assessee's option and holding that the amendment to Notification No. 8/97-C.E. did not dilute the exemption under Notification No. 55/91-C.E.

Conclusion: The assessee was entitled to choose the more beneficial notification, and the demand was not sustainable.

---