2017 (4) TMI 745 - AT - Central Excise

CENVAT credit - SSI exemption - N/N. 8/2003 CE dated 01.03.2003 - appellants were also manufacturing and clearing the goods affixing the brand name of others, on which they had paid appropriate duty after availing CENVAT Credit on the inputs - CENVAT credit denied on the inputs used in the manufacture of Branded goods, cleared on payment of duty - Held that - the issue is no more res-integra being covered by the judgement of the Hon ble Supreme Court in Nebulae Health Care Ltd s case 2015 (11) TMI 95 - SUPREME COURT , where it was held that once excise duty is paid by the manufacturer on such branded goods manufactured, the brand name whereof belongs to another person, on job work basis, the SSI Unit would be entitled to Cenvat/Modvat credit on the inputs - the appellant are eligible to CENVAT credit on the inputs used in the manufacture of branded goods, even though, they had availed benefit of SSI exemption on the goods manufactured on their own account - appeal allowed - decided in favor of appellant.

Summary

Issues:
Eligibility of CENVAT credit on inputs used in manufacturing branded goods while claiming SSI exemption.

Analysis:
The appeal was filed against an order passed by the Commissioner (Appeals) of Central Excise, Customs, and Service Tax-Rajkot. The appellant was engaged in manufacturing excisable goods and availed the SSI exemption notification. They also manufactured goods affixing the brand name of others and paid duty after utilizing CENVAT Credit on inputs. A demand notice was issued for recovery of the credit on inputs used in manufacturing branded goods. The demand was confirmed with interest and penalty by the adjudicating authority, which was upheld by the Ld. Commissioner (Appeals), leading to the present appeal.

The appellant's advocate argued that the issue of CENVAT credit eligibility on inputs used in manufacturing branded goods while claiming SSI exemption is settled by the Supreme Court in a specific case. The Revenue's representative reiterated the Ld. Commissioner (Appeals)' findings. After hearing both sides and examining the records, it was noted that the appellant manufactured excisable goods on their own account and claimed SSI exemption while also manufacturing and clearing goods under others' brand names by paying duty after availing CENVAT Credit. The Revenue denied the credit on inputs used in manufacturing branded goods.

Referring to the Supreme Court's judgment in Nebulae Health Care Ltd's case, the Tribunal observed that the appellant is entitled to CENVAT credit on inputs used in manufacturing branded goods, despite availing SSI exemption on goods manufactured on their own account. The judgment clarified the scheme of the Notifications, emphasizing that the exemption does not apply to goods bearing third-party brand names, and excise duty must be paid on such products. Therefore, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief as per law.