2016 (10) TMI 787 - AT - Central Excise

Denial of SSI exemption - N/N. 6/2002-C.E., dated 1-3-2002 - Low Sodium Salt called LoNa - whether denial of CENVAT credit justified on the ground that the Cenvat credit has been taken on the inputs used in the manufacture of goods with brand name of others? - entitlement for both the benefits i.e. SSI exemption and Cenvat credit - Held that - reliance placed on the decision of Commissioner of Central Excise, Chennai v. Nebulae Health Care Ltd. 2015 (11) TMI 95 - SUPREME COURT where it was held that manufacture of dutiable goods bearing a brand name is outside the scope and purview of the SSI exemption notification since the branded goods manufactured on job work basis is not covered by the said notification. 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 which were used for manufacture of such goods as on those inputs also excise duty was paid. SSI exemption cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of SSI exemption and Cenvat credit for manufacturing activities.

Analysis:
1. Background: The appellant, engaged in manufacturing Maize Starch and Low Sodium Salt (LoNa) under specific exemptions, faced a dispute regarding the denial of SSI exemption due to availing Cenvat credit on inputs used for manufacturing products with brand names of others.

2. Contentions: The appellant argued that the issue was settled by a Supreme Court judgment in a similar case, while the respondent contended that the denial of SSI exemption was justified based on another Supreme Court ruling.

3. Judgment: The Commissioner (Appeals) dismissed the appeal, citing that simultaneous availment of Cenvat credit and SSI exemption for the same products was impermissible. The Commissioner relied on the Supreme Court judgment in Ramesh Food Products case, which held that SSI exemption does not apply to branded goods manufactured on job work basis.

4. Legal Precedents: Referring to the Supreme Court judgment in Nebulae Health Care Ltd., the Tribunal emphasized that excise duty paid on branded goods manufactured on job work basis allowed SSI units to claim Cenvat credit on inputs used for such goods, rendering them ineligible for SSI exemption.

5. Decision: The Tribunal found no merit in the impugned order and allowed the appeal in favor of the appellant, setting aside the denial of SSI exemption and Cenvat credit based on the legal position established by the Supreme Court judgments.

This detailed analysis of the judgment highlights the legal reasoning, precedents, and final decision regarding the denial of SSI exemption and Cenvat credit for the appellant's manufacturing activities, providing a comprehensive understanding of the case.