Election between MODVAT and exemption notification upheld where later approved classification list operated

An assessee could choose between MODVAT and exemption under Notification No. 175/86-C.E., as amended, because both were substantive concessions and the election lay with the assessee. Where a later classification list opting for the exemption was approved, that list became operative, and assessment could not be sustained on the basis of an earlier classification list selecting MODVAT. In the absence of proof that duty was short-paid under the exemption notification, the demand founded on the first classification list failed.

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Issues: Whether the assessee could opt for the exemption under Notification No. 175/86-C.E., as amended, instead of the MODVAT concession already approved, and whether the assessment could be made on the first classification list notwithstanding the later approved classification list.

Analysis: The assessee had filed two classification lists, one seeking MODVAT and the other seeking exemption under Notification No. 175/86-C.E., as amended by Notification No. 216/86-C.E. The later classification list was also approved. The benefit of MODVAT and the exemption notification were substantive concessions, and the choice between them lay with the assessee. There was no legal bar to opting out of MODVAT in favour of the more beneficial exemption, provided duty was correctly paid under the chosen notification. The Revenue did not show that duty had been short-paid under Notification No. 175/86-C.E.

Conclusion: The later classification list and the exemption notification were operative, and the demand based on the first classification list was unsustainable. The appeal was liable to be dismissed.

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