Exemption denial under Notification 166/86 remained, while Small Scale Exemption claim was to be examined at duty quantification.

The challenge to denial of exemption under Notification No. 166/86 was not pursued on merits, so that denial remained undisturbed. The assessee was nevertheless entitled to have its claim for Small Scale Exemption under Notification No. 175/86 examined at the stage of duty quantification. The adjudicating authority was directed to consider that benefit in accordance with law after giving the assessee a hearing.

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Issues: Whether the appeal deserved interference on merits against denial of exemption under Notification No. 166/86, and whether the assessee could seek consideration of Small Scale Exemption Notification No. 175/86 while quantifying the duty demand.

Analysis: The challenge to the impugned order on merits was not pressed. The denial of the exemption under Notification No. 166/86, as amended by Notification No. 75/90, was therefore left undisturbed. At the same time, the assessee's request for consideration of the small scale exemption at the stage of duty quantification was accepted, and the adjudicating authority was directed to examine that claim in accordance with law after hearing the assessee.

Conclusion: The appeal was dismissed, and the denial of exemption under Notification No. 166/86 stood affirmed, with a direction to consider the benefit of Notification No. 175/86 while quantifying duty.

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