Small scale exemption cannot be combined with Cenvat credit when the scheme requires an election between concessions.

A manufacturer could not split benefits between the small scale exemption and the Cenvat/Modvat credit scheme for clearances under different brand names. Goods cleared under its own brand name and under another person's brand name fell within the same tariff heading, and the notification did not permit bifurcation of the concession in the manner claimed. The exclusion applicable to export clearances could not be extended by analogy to branded clearances, which remained dutiable. Applying the governing principle that the manufacturer must elect between the exemption scheme and the credit scheme, the denial of credit was upheld.

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Issues: Whether a manufacturer could simultaneously avail small scale exemption for goods cleared under its own brand name and take Cenvat/Modvat credit for inputs used in goods cleared on payment of duty under another brand name.

Analysis: The goods, whether cleared under the appellant's own brand name or another's brand name, fell under the same tariff heading and were covered by the small scale exemption notification. The scheme under the notification permitted exclusion of export clearances for computing the exemption threshold, but branded clearances in the name of another person were specifically treated differently and remained dutiable. The analogy drawn from the circular relating to export goods was held inapplicable. The controlling principle from the Supreme Court decision relied upon was that a manufacturer must choose between the exemption scheme and the credit scheme, and simultaneous enjoyment of both for different clearances is not permissible.

Conclusion: The appellant was not entitled to simultaneously claim small scale exemption and Cenvat/Modvat credit in the manner sought, and the denial of credit was upheld.

Ratio Decidendi: A manufacturer cannot simultaneously avail small scale exemption for part of its clearances and Cenvat or Modvat credit for other clearances where the scheme requires an election between the two concessions and does not permit bifurcation of benefits.

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