2010 (7) TMI 342 - AT - Central Excise

Cenvat credit SSI exemption - appellant did not avail any Cenvat Credit in case of the branded goods cleared for home consumption - whether the Cenvat Credit is available on the input used in the manufacture of branded goods which are cleared for home consumption on full payment of duty - Para 4 of notification it follows that certain specified goods manufactured and cleared by SSI unit are kept out of purview of exemption and these are the goods cleared under the brand names of third parties who themselves are ineligible for the benefit of SSI exemption Held that - embargo on availment of Cenvat credit on inputs, need not be applied to inputs used in, or in relation to, the manufacture of those specified goods which are cleared under the brand name/trade name of another person ineligible for the benefit of the Notification order set aside Cenvat held available

Summary

Issues:
1. Availment of Cenvat Credit on branded goods cleared for home consumption.
2. Interpretation of Notification No. 8/2000-C.E. regarding exemption conditions and Cenvat Credit eligibility.

Issue 1: Availment of Cenvat Credit on branded goods cleared for home consumption:

The appellant, engaged in manufacturing excisable goods, contested the demand raised against them for recovery of Cenvat Credit, which was confirmed by lower authorities. The appellant argued that they did not avail any Cenvat Credit on goods cleared for home consumption exempt from Central Excise duty. They specifically mentioned not availing credit on branded goods cleared for home consumption and paying duty through PLA only. The department did not dispute this plea, indicating the appellant did not avail any Cenvat Credit for branded goods cleared for home consumption. Consequently, the appeal succeeded on this ground.

Issue 2: Interpretation of Notification No. 8/2000-C.E. regarding exemption conditions and Cenvat Credit eligibility:

The Tribunal examined whether Cenvat Credit is available on inputs used in manufacturing branded goods cleared for home consumption on full duty payment. Referring to relevant provisions of Notification No. 8/2000-C.E., it was noted that certain specified goods cleared under third-party brand names ineligible for SSI exemption are excluded from exemption benefits. Therefore, the restriction on availing Cenvat credit on inputs used in manufacturing such specified goods need not apply. The condition specified in the notification was construed to allow SSI units to avail Cenvat credit on inputs used in manufacturing specified goods cleared on duty payment, particularly those cleared under third-party brand names. This interpretation aligned with a previous case recognizing this benefit for SSI units. Consequently, the appeal succeeded, the impugned order was set aside, and the appeal was allowed.

This judgment clarifies the issues surrounding Cenvat Credit availment on branded goods cleared for home consumption and interprets the conditions of Notification No. 8/2000-C.E. regarding exemption and Cenvat Credit eligibility, providing guidance on the applicability of such benefits to SSI units in specific scenarios.