Exemption waiver and Modvat credit could be chosen together where duty payment made the dispute revenue neutral.

An assessee entitled to full exemption may opt to forgo that exemption and pay duty in order to avail Modvat credit on duty-paid inputs, where the exemption notification and contemporaneous trade notice are read as permitting such a choice. Withdrawal of the earlier trade notice did not justify interference, particularly because the matter was treated as technical and without revenue implication. In the connected appeal, the duty paid matched the Modvat credit availed, and the dispute was described as revenue neutral. The stated result was that the assessee could forgo the exemption and claim Modvat credit.

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Issues: Whether an assessee who is entitled to full exemption can forgo the exemption and pay duty so as to avail Modvat credit on duty-paid inputs.

Analysis: The exemption notification and the contemporaneous trade notice were understood to permit the assessee to choose between full exemption and payment of duty. The later withdrawal of the earlier trade notice did not warrant interference in the present appeals, particularly as the matter was treated as technical and as having no revenue implication. In the connected appeal, the amount of duty paid matched the Modvat credit availed, and the dispute was also stated to be revenue neutral.

Conclusion: The assessee was entitled to forgo the exemption and avail Modvat credit; the appeals were not liable to succeed.

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