Optional exemption notifications can be declined by an assessee, supporting interim waiver of duty deposit and penalty.

An assessee may decline to avail an exemption notification and instead pay duty on intermediate goods, as earlier Tribunal decisions were treated as supporting an optional approach to exemption. Although a contrary view was noted that an exemption notification forms part of the statute, the Tribunal followed its own prior rulings and accepted the assessee's position. On that basis, it found a prima facie case and dispensed with deposit of the duty demand and penalty, granting interim relief pending further hearing.

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Issues: (i) Whether an assessee may choose not to avail the benefit of an exemption notification and still discharge duty on the intermediate goods; (ii) whether waiver of deposit of duty and penalty was justified in the circumstances.

Issue (i): Whether an assessee may choose not to avail the benefit of an exemption notification and still discharge duty on the intermediate goods.

Analysis: The Tribunal noted that the cited decisions had consistently taken the view that, despite the existence of an exemption notification, the assessee has the option to avail or not to avail the exemption. The competing reliance on the proposition that an exemption notification forms part of the statute was noted, but the Tribunal treated itself as bound by its earlier decisions and followed that line of authority.

Conclusion: The issue was answered in favour of the assessee, and the assessee was treated as entitled to decline the exemption and pay duty in the ordinary manner.

Issue (ii): Whether waiver of deposit of duty and penalty was justified in the circumstances.

Analysis: In view of the binding Tribunal decisions supporting the assessee's position on exemption, the Tribunal found a prima facie case for relief. It therefore considered it appropriate to dispense with the deposit demanded at this stage.

Conclusion: Waiver of deposit of the duty demand and the penalty was granted in favour of the assessee.

Final Conclusion: Interim relief was granted on the basis that the assessee's challenge raised a settled and recurring question on the optional character of exemption notifications, and the matter was listed for out-of-turn hearing.

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