Product-wise SSI exemption: duty paid on one item does not forfeit exemption on other products absent a clear option to opt out.

An SSI exemption notification was applied product-wise, so payment of duty on one product, including waste and scrap, did not by itself amount to an exercise of option to forgo exemption on other products. The clause requiring an option during the financial year was relevant only where the assessee chose, for the same product, to claim exemption for part of the year and not for the remainder. Because exemption on machinery parts was continuously availed throughout the year, denial of SSI benefit on that basis was unwarranted, and entitlement to exemption on the other products was preserved.

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Issues: Whether payment of duty on one product or waste and scrap disentitles the assessee from claiming small scale industry exemption on other products under the exemption notification.

Analysis: The Tribunal held that the exemption notification operated product-wise and that the clause relating to exercise of option during the financial year applied only where the assessee chose, in respect of the same product, to claim exemption for part of the year and not to claim it for the remaining part. Payment of duty on waste and scrap did not amount to an exercise of such option in relation to other products. Since the assessee had continued to avail the exemption for machinery parts throughout the year, denial of the benefit on that basis was unwarranted.

Conclusion: The assessee remained entitled to the small scale exemption on the other products, and the Revenue's challenge failed.

Ratio Decidendi: An exemption notification granting SSI benefit is to be applied product-wise, and payment of duty on one product does not by itself forfeit exemption on other products unless the option to forgo exemption is exercised for that very product.

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