SSI exemption option: full-duty clearances not claimed under the notification were excluded from the turnover limit computation.

An option-based SSI exemption under Notification No. 9/2000 was construed as applying only to clearances where the concession was actually claimed. Once the assessee exercised the option during the financial year, it could not be withdrawn, but clearances made on payment of normal duty without availing the notification were excluded from computation of the first clearance value limit of Rs. 100 lakhs. On that basis, such full-duty clearances did not exhaust the exempted turnover threshold, and the resulting duty demand and consequential penalty were unsustainable.

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Issues: Whether, for availing the concessional rate under Notification No. 9/2000 dated 01/03/2000, clearances made on payment of normal duty without claiming the notification were to be included in computing the first clearance value of Rs.100 lakhs during the financial year.

Analysis: The notification was an option-based SSI exemption granting concessional duty on a slab basis up to the prescribed clearance limit. Once the option was exercised during the financial year, it could not be withdrawn, but the computation of the clearance threshold had to be made only with reference to clearances where the concession was actually availed. Clearances on payment of normal duty without taking the benefit of the notification were not required to be counted for exhausting the exempted turnover limit. The reasoning was consistent with the Larger Bench view relied upon in support of partial availing of exemption benefits.

Conclusion: The value of clearances made on payment of full duty was not includible for computing the Rs.100 lakhs limit under the notification, and the duty demand and consequential penalty were unsustainable.

Ratio Decidendi: Where an SSI exemption notification is optional and availed during the financial year, clearances on full duty without claiming the concession are excluded from the turnover computation for the exemption limit.

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