SSI exemption unaffected by CENVAT credit on duty-paid branded job-work goods under later notification exclusions

SSI exemption remains available for a unit's own clearances even where it avails CENVAT or MODVAT credit on inputs used for branded goods manufactured on job work for third parties, provided duty has been paid on those branded goods. The relevant exemption notifications treated clearances under another person's brand name as excluded from both the aggregate-clearance computation and the exemption itself, thereby separating such duty-paid branded goods from the assessee's exempt own products. The earlier ruling on Notification No. 175/86-CE was limited to simultaneous exemption and Modvat under a different scheme and did not control later notifications containing express exclusion clauses.

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Issues: Whether an SSI unit that avails CENVAT or MODVAT credit only in respect of branded goods manufactured on job work for third parties, after paying excise duty on those goods, is thereby disentitled from claiming SSI exemption for its own clearances under the relevant notifications.

Analysis: The relevant exemption notifications treated clearances bearing another person's brand name as outside the computation of aggregate value of clearances for home consumption and also excluded such goods from the exemption itself. The notifications therefore drew a clear distinction between the assessee's own exempt clearances and branded goods manufactured for third parties on job work, which were to bear normal duty liability. Once duty was paid on those branded goods, credit on inputs used for such manufacture could be availed without affecting the assessee's entitlement to SSI exemption for its own products. The earlier decision concerning Notification No. 175/86-CE was confined to simultaneous enjoyment of exemption and Modvat on the same scheme and did not govern the later notifications, which contained specific exclusion clauses.

Conclusion: The assessee was entitled to claim SSI exemption on its own goods notwithstanding availment of CENVAT or MODVAT credit for duty-paid branded goods manufactured on job work for third parties.

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