Small scale exemption and Modvat credit can coexist for branded goods where the issue is already covered by precedent.

Entitlement to small scale exemption under Notification No. 1/93-C.E. was examined where the assessee had also taken Modvat credit on inputs used for branded goods. The legal issue was whether such credit use barred simultaneous SSI exemption. The Commissioner (Appeals) accepted that the notification did not prohibit the benefit where duty had been paid at the full rate on the relevant goods, and the Tribunal noted that the point was already covered by a Larger Bench decision. On that basis, the assessee retained the exemption and the Revenue's appeal failed.

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Issues: Whether the assessee was entitled to small scale exemption under Notification No. 1/93-C.E. despite having availed Modvat credit on inputs used in the manufacture of branded goods.

Analysis: The dispute turned on whether the availment of Modvat credit in respect of inputs used for branded goods disabled the assessee from claiming the SSI exemption. The Commissioner (Appeals) had accepted that the notification did not bar such simultaneous benefit where duty at the full rate had been paid on the relevant goods. The Tribunal noted that the same question had already been decided by the Larger Bench and that the departmental representative fairly conceded that the issue stood covered by that decision.

Conclusion: The assessee was entitled to the SSI exemption and the Revenue's appeal was dismissed.

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