Conditional exemption at option of taxable person :
The provision applies only in cases where exemption has been granted ‘absolutely’ i.e. unconditionally. It may be wholly or partly.
Some exemptions are subject to some conditions In such cases, the taxable person may or may not avail of the concession or exemption.
In Remedies (India) Pharmaceuticals v. CCE 1998(101) ELT 344 (CEGAT), it was held that benefit of a (conditional) exemption cannot be thrust upon an unwilling manufacturer [the words ‘conditional’ are not used in the order].
In CCE v. VIP Industries 1998(103) ELT 95 (CEGAT), it was held that a conditional exemption is at the option of assessee. – same view in Glaxo India Ltd. v. CCE 1999(109) ELT 211 (CEGAT) * Ashok Organic Industries v. CCE 2000(122) ELT 773 (CEGAT) * Narayan Polyplast v. CCE 2003(153) ELT 160 (CEGAT).
In Steelco Gujarat v. CCE 2000 (122) ELT 381 (CEGAT), the exemption notification was subject to condition that Cenvat credit should not be availed on inputs. The assessee did avail Cenvat. It was held that in such case, exemption could be denied, not the credit, i.e. assessee will be denied exemption, but he cannot be asked to reverse Cenvat credit.
Exemption subject to condition that input tax credit should not be availed is conditional and hence optional – If exemption is conditional, it is option of assessee. He may not follow the condition prescribed and hence may pay duty e.g. a notification says : The goods and services are exempt from GST, provided that no input tax credit is availed. Hence, if input tax credit is availed, automatically, the exemption is not available and assessee can (in fact, has to) pay GST.