Small-scale exemption threshold must include earlier concessional clearances when the assessee switches schemes mid-year.

When a manufacturer shifts during the same financial year from a concessional duty notification to a small-scale exemption notification, earlier clearances made under the concessional scheme must still be counted for computing the exemption limit. The amended exemption scheme permits a choice not to avail the exemption and to clear goods at the applicable rate, but a later election to claim small-scale exemption operates only for the remaining clearances. The threshold is therefore calculated on the basis of all relevant clearances in that financial year, and exemption is available only on the balance, not on a fresh count from the date of switch.

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Issues: Whether, after switching from a concessional duty notification to the small-scale exemption notification during the same financial year, earlier clearances made under the concessional notification had to be counted while computing the exemption limit under the small-scale exemption notification.

Analysis: The amended exemption scheme allowed a manufacturer to choose not to avail the exemption and instead clear goods at the applicable rate, but once the assessee had opted for the concessional notification and made clearances during the financial year, the later switch to the small-scale exemption notification could operate only for the remaining clearances. The earlier clearances could not be ignored for the purpose of computing the exemption threshold, because the amendment introduced a change in the manner of calculating entitlement within the same financial year.

Conclusion: The earlier clearances had to be taken into account while computing the exemption limit, and the assessee was entitled to the small-scale exemption only on the balance clearances. The issue was decided against the assessee.

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