Product-wise small scale exemption cannot be denied for machinery parts merely because duty was paid on a different class of goods.

A small scale exemption under Notification No. 1/93-C.E. was treated as product-wise, not as a blanket bar across all clearances by the assessee. The restriction in paragraph 4 applied only where the assessee chose, within the same financial year, to avail or forego exemption for the same product at different times. Duty paid on waste and scrap of copper could not deny exemption for a distinct product category, namely machinery and machinery parts, because no such option had been exercised for those goods. The Revenue's demand on machinery parts therefore failed, and the duty and penalty order was set aside with consequential relief.

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Issues: Whether payment of duty on waste and scrap of copper during a financial year disentitled the assessee from claiming small scale exemption under Notification No. 1/93-C.E. in respect of its machinery and machinery parts.

Analysis: The exemption notification was construed as operating product-wise and not as a blanket bar for all clearances made by an assessee. Paragraph 4 applied where the assessee exercised an option within the financial year to avail or not avail exemption in respect of the same product for different parts of that year. It did not extend to a situation where duty had been paid on one category of goods, namely waste and scrap, while exemption was continuously claimed for another distinct product category, namely machinery parts. Payment of duty on waste and scrap could at most affect subsequent clearances of waste and scrap during that year and could not defeat exemption for other products for which no such option had been exercised.

Conclusion: The assessee was not disentitled to small scale exemption on machinery parts by reason of duty payment on waste and scrap; the Revenue's demand failed.

Final Conclusion: The order confirming duty and penalty was set aside, and the appeal succeeded with consequential relief.

Ratio Decidendi: A product-wise exemption under a small scale notification cannot be denied for one class of goods merely because duty was paid on a different class of goods; the restriction applies only to the same product where the option under the notification is exercised.

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