Craft paper exemption under Notification No. 4/2006-C.E. follows prescribed conditions; contrary demand and Cenvat credit disallowance set aside.

Exemption under Notification No. 4/2006-C.E. for first clearances of craft paper was treated as subject to the prescribed conditions, including the clearance limit and the bar on manufacturers availing Notification No. 8/2003-C.E. The Tribunal followed its earlier decision on identical facts in the same notification scheme and held that the department's contrary demand could not stand. On that basis, the disallowance of Cenvat credit was also found unsustainable and was set aside together with the demand.

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Issues: Whether the assessee was entitled to the exemption scheme under Notification No. 4/2006-C.E. for first clearance of craft paper and whether the demand disallowing Cenvat credit could be sustained.

Analysis: The exemption under Sl. No. 90 of Notification No. 4/2006-C.E. was held to be governed by the prescribed conditions, including the limit on first clearances and the bar against manufacturers availing the benefit of Notification No. 8/2003-C.E. The issue had already been decided by the same Bench in an earlier batch of appeals involving identical facts, and the Tribunal followed that precedent. On that basis, the demand raised by the department and the corresponding disallowance of Cenvat credit were found unsustainable.

Conclusion: The assessee was held entitled to succeed, and the demand as well as the disallowance of Cenvat credit were set aside.

Ratio Decidendi: Where an identical exemption issue under the same notification scheme has already been conclusively decided, and the statutory conditions for the exemption govern the clearance in question, a contrary demand disallowing credit cannot be sustained.

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