SSI exemption and Cenvat credit coexist where branded job-work goods are dutiable and the unit's own products remain eligible.

SSI exemption under Notification No. 8/2003-C.E. was considered alongside Cenvat credit on inputs used in manufacture of branded goods cleared on job work basis. The later Supreme Court position was applied to hold that branded goods made for others on job work do not extend SSI exemption to those goods, but such dutiable branded goods do not forfeit SSI exemption for the unit's own products. On that basis, credit on inputs used for the dutiable branded goods remained permissible, and denial of SSI exemption was unsustainable.

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Issues: Whether the appellant was entitled to SSI exemption on its own products despite taking Cenvat credit on inputs used in the manufacture of branded goods cleared on job work basis.

Analysis: The exemption under Notification No. 8/2003-C.E. was denied on the premise that availing Cenvat credit and SSI exemption could not coexist. The earlier view relied upon in the impugned order was not accepted in the light of the later Supreme Court ruling, which clarified that branded goods manufactured on job work basis for others fall outside the SSI exemption for those goods, and that duty-paid branded goods do not affect the availability of SSI exemption in respect of the unit's own products. In that situation, credit on inputs used for such dutiable branded goods remains permissible.

Conclusion: The denial of SSI exemption was unsustainable and the appellant was entitled to the benefit claimed.

Final Conclusion: The impugned order was set aside and the appellant's appeal succeeded.

Ratio Decidendi: Manufacture of dutiable branded goods on job work basis does not bar SSI exemption for a unit's own products, and Cenvat credit on inputs used for such dutiable goods remains allowable.

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