Finality of exemption order defeats duty demand based on denied small-scale industry benefit.

Duty demand based on denial of Notification No. 175/86-C.E. could not survive once the lower appellate authority had granted the exemption and that order had attained finality. The demand had been confirmed on the ground that the second unit was not registered with the Small Scale Industries authorities during the relevant period, but the unchallenged appellate order allowed the notification benefit. As the foundation for the demand had ceased to exist, the duty confirmation was held unsustainable and consequential relief followed.

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Issues: Whether the demand of duty for the disputed period could be sustained when the benefit of Notification No. 175/86-C.E. had already been granted in appeal and that appellate order had attained finality.

Analysis: The disputed demand was founded on denial of the exemption on the footing that the second unit was not registered with the Small Scale Industries authorities during the relevant period. However, the lower appellate authority had subsequently allowed the benefit of the notification, and no appeal had been filed against that order. Once the order granting the exemption had become final, the basis on which the demand had been confirmed ceased to survive.

Conclusion: The demand was not sustainable and the assessee was entitled to relief.

Final Conclusion: The impugned duty confirmation was set aside and the appeal was allowed with consequential relief.

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