Cenvat credit for branded SSI clearances is available when duty is paid on goods outside the exempted category.

Where a small-scale industry manufacturer clears branded goods of another person on payment of central excise duty, the bar in paragraph 2(iii) of the SSI exemption notification on taking Cenvat credit applies only to specified exempted goods cleared for home consumption. Goods bearing another person's brand name fall outside the exempted category, and if duty is paid on such clearances, the credit embargo does not operate. On the stated facts, the department did not dispute that no Cenvat credit was taken on the branded goods cleared for home consumption and duty was paid through PLA, so Cenvat credit on inputs used in those goods was allowable and the demand could not stand.

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Issues: Whether a small scale industry manufacturer clearing branded goods on payment of central excise duty is entitled to Cenvat credit on inputs used in such branded goods under the exemption notification.

Analysis: The exemption notification excluded branded goods of another person from the exemption, and the restriction against availing credit in paragraph 2(iii) was held to apply only to specified goods cleared for home consumption within the SSI exemption regime. Goods bearing the brand name of another person were outside the exempted category, and where duty was paid on such branded clearances, the embargo on credit did not operate. On the facts, the department did not dispute that no Cenvat credit had been availed on the branded goods cleared for home consumption, and the appellant had paid duty on those clearances through PLA.

Conclusion: The appellant was entitled to Cenvat credit on inputs used in branded goods cleared on payment of duty, and the demand could not survive.

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