PerG.A. Brahma Deva :

The appellant is engaged in manufacture of Compound Rubber falling under chapter 40 of the schedule of Central Excise Tariff Act. The appellant claimed exemption for the Compound Rubber under Notification No. 152/87 dated 25.5.87. The Assistant Commissioner who adjudicated the proceedings passed an order holding that the appellant manufactures vulcanized rubber classifiable under Heading 4005 and denied exemption in terms of Notification No. 152/87 observing that the Notification provides that the Compound Rubber will be exempted if it is used in factory of production for the manufacture of goods falling under chapter 40 and same is not available to the appellants. The view taken by the Assistant Commissioner was upheld by the Commissioner in the impugned order. Hence these appeals.

2. Shri Ravi Shankar, learned Advocate appearing for the appellants submitted that the product manufactured by the appellants being identified as Rubber Strips and for the earlier period the Commissioner as per his order dated 31.5.94 has considered the matter and dropped the proceedings accepting the contention of the party and on which no appeal has been filed. He submitted that in the circumstances there was no justification to pass an order confirming the demand since the product is one and the same. Apart from this, he submitted that the issue with reference to the exemption has already been considered by the Tribunal in a series of cases including in the case of Umbergaon Rubber (P) Ltd. 1992 (92) ELT 576 (Tribunal) as well as in S.R.I. Footwear Industries 1997 (93) ELT 107 (Tribunal). In those cases, it was clearly held that the Compound Rubber captively used for manufacture of plates, sheets and strips of rubber falling under chapter 40 of the Central Excise Tariff Act is exempted in terms of Notification No. 152/87. He submitted that the item in question falls under chapter 4005 and accordingly there was no reason to deny exemption in terms of Notification No. 152/87. He also submitted that the appellant is entitled for Small Scale Exemption, but fairly conceded that same has not been claimed before the authorities below, nevertheless he may be permitted to claim Small Scale Exemption even at this stage since it is a nature of privilege. He referred to the decision of the Tribunal in Sonic Band International, 1999 (109) ELT 524 (T) where in it was held that an exemption can be claimed at any stage and cannot be denied as an after thought. He relied up on the decision of Supreme Court in the case of Commissioner of Income Tax Vs. Mahendra Mills and Others, 2000 (243) ITR 56 (SC), in support of his contention that SSI exemption is a nature of "privilege" and cannot be converted into "disadvantage" and an exemption is nature of an "option" to the tax payer and cannot be converted into an "obligation".

3. On the other hand Smt. Radha Arun, appearing for the Revenue submitted that there is no estoppel in the taxing statute. If there was an error for the early period that can be rectified by passing suitable order as it was done in the instance case. She submitted that the ratio of the decision of the Tribunal in the case of Umbergaon Rubber (P) Ltd. heavily relied upon by the other side is not applicable to this case since duty was demanded on Compound Rubber in that case, but demand is on rubber strip in the present case. She also submitted that the assessee has not made any claim with reference to the SSI exemption before the authorities below and for the first time claim was made before the Tribunal.

4. We have carefully considered the matter. We find that the appellants have placed decision of the Tribunal in the case of Umbergaon (supra) before the authorities below on the ground that decision is squarely applicable. The Commissioner (Appeals) has not given any cogent reason why the said decision is not applicable to the facts of this case. Further we agree with the plea taken by the appellants' counsel that claim of