Small-scale exemption breach and absence of required excise licence justified penalty under the exemption notification.

Penalty was upheld where the assessee, while claiming small-scale exemption and the benefit of Notification No. 111/78-C.E., had crossed the prescribed clearance limit and also failed to obtain the required L-4 licence. On the admitted facts, the exemption conditions and the requirement to hold the licence were not satisfied, so the appellate authority's view was correct and the penalty was justified.

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Issues: Whether the imposition of penalty of Rs. 500 was justified when the assessee, while availing small scale exemption and the benefit of Notification No. 111/78-C.E., crossed the prescribed clearance limit but did not apply for the required central excise licence.

Analysis: The assessee had admitted that its value of clearances exceeded 80% of the exemption limit and that it had not applied for the L-4 licence despite being required to do so. On these admitted facts, the appellate authority's view that the statutory conditions for availing the exemption and continuing without licence were not satisfied was found to be correct.

Conclusion: The penalty was held to be justified and the assessee's challenge failed.

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