Tribunal allows CENVAT credit on inputs for branded goods despite SSI exemption

The Tribunal allowed the appeal, holding that the appellant is entitled to claim CENVAT credit on inputs used in manufacturing branded goods despite availing SSI exemption for goods manufactured under their account. The Tribunal cited a Supreme Court judgment to clarify that the exemption does not extend to goods bearing third-party brand names, requiring excise duty payment on such products. As a result, the impugned order demanding recovery of credit on inputs for manufacturing branded goods was set aside, granting relief to the appellant in accordance with the law.

---

---

Issues:
Eligibility of CENVAT credit on inputs used in manufacturing branded goods while claiming SSI exemption.

Analysis:
The appeal was filed against an order passed by the Commissioner (Appeals) of Central Excise, Customs, and Service Tax-Rajkot. The appellant was engaged in manufacturing excisable goods and availed the SSI exemption notification. They also manufactured goods affixing the brand name of others and paid duty after utilizing CENVAT Credit on inputs. A demand notice was issued for recovery of the credit on inputs used in manufacturing branded goods. The demand was confirmed with interest and penalty by the adjudicating authority, which was upheld by the Ld. Commissioner (Appeals), leading to the present appeal.

The appellant's advocate argued that the issue of CENVAT credit eligibility on inputs used in manufacturing branded goods while claiming SSI exemption is settled by the Supreme Court in a specific case. The Revenue's representative reiterated the Ld. Commissioner (Appeals)' findings. After hearing both sides and examining the records, it was noted that the appellant manufactured excisable goods on their own account and claimed SSI exemption while also manufacturing and clearing goods under others' brand names by paying duty after availing CENVAT Credit. The Revenue denied the credit on inputs used in manufacturing branded goods.

Referring to the Supreme Court's judgment in Nebulae Health Care Ltd's case, the Tribunal observed that the appellant is entitled to CENVAT credit on inputs used in manufacturing branded goods, despite availing SSI exemption on goods manufactured on their own account. The judgment clarified the scheme of the Notifications, emphasizing that the exemption does not apply to goods bearing third-party brand names, and excise duty must be paid on such products. Therefore, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief as per law.

---