2017 (3) TMI 1208 - AT - Central Excise

SSI exemption - denial on the ground that credit has been taken in respect of other s brand name dutiable goods - Held that - on similar set of facts in the case of CCE, Chennai vs. Nebulae Health Care Ltd. 2015 (11) TMI 95 - SUPREME COURT , the Hon ble Supreme Court held that the exemption for own products, manufactured by SSI units, cannot be denied on the ground that the said unit undertaken manufacture and clearance of branded goods for which duty has been discharged by availing the Cenvat credit. The availment of credit in respect of dutiable final products cannot be held as a bar for eligibility of SSI exemption in respect of own goods - appellant have not availed any credits on any inputs used in the manufacture of their own products while availing threshold exemption. The appellant s plea that wherever they have taken (in 2005-2006) the same has been rectified by way of reversal of amount attributable to the manufacture of their own products can be verified by the Jurisdictional officer - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of the appellant for exemption under Notification 8/2003-CE.
2. Availment of Cenvat credit on inputs affecting eligibility for exemption.
3. Interpretation of the Notification in light of the Hon'ble Supreme Court's decision.

Analysis:
1. The appeal challenged the denial of exemption to the appellant under Notification 8/2003-CE for their own goods manufactured and cleared without another person's brand name. The lower authorities held that availing Cenvat credit on inputs for goods with another's brand name would bar the appellant from the exemption. The dispute centered on the eligibility of the appellant for exemption up to the threshold limit. The appellant contended that exemption for their own products should not be denied based on credit taken for goods with another's brand name.

2. The appellant argued that the credit on inputs was specific to products with another's brand name, for which duty was discharged separately. They referred to a Supreme Court decision to support their claim. The authorities, however, maintained their position. The Tribunal examined the facts and cited a Supreme Court ruling that clarified the scheme of the Notifications. It emphasized that the exemption for SSI units' own products cannot be denied based on credit availed for goods with another's brand name. The Tribunal highlighted the distinction between goods bearing third-party brand names and those manufactured by SSI units for themselves.

3. The Tribunal noted the appellant's rectification of Cenvat credit taken on common inputs for exempted goods manufactured on their account. It emphasized the need to verify that no credits were availed on inputs used for the appellant's own products during the exemption period. The Tribunal concluded that the Supreme Court's ruling, along with Tribunal decisions, supported the appellant's case, subject to verification by the jurisdictional officer. Consequently, the Tribunal found no merit in the lower authorities' decision, set it aside, and allowed the appeal, disposing of the miscellaneous application as well.