CENVAT credit for branded goods remains available despite SSI exemption on separately cleared own products.

CENVAT credit on inputs used to manufacture branded goods remains admissible even where the assessee also clears its own goods under SSI exemption, because the branded goods cleared for third parties on payment of duty are treated separately from exempted own-account clearances. Once duty is paid on the branded goods, the related inputs do not lose credit eligibility merely due to simultaneous availment of Notification No. 8/2003-CE benefit on other products. The assessee was therefore entitled to take CENVAT credit on those inputs.

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Issues: Whether CENVAT credit on inputs used in the manufacture of branded goods is admissible when the assessee also avails SSI exemption on goods manufactured on its own account under Notification No. 8/2003-CE dated 01.03.2003.

Analysis: The factual position was undisputed that the assessee manufactured its own goods under SSI exemption and also cleared branded goods of third parties on payment of duty after taking CENVAT credit. The denial of credit was contrary to the settled legal position that branded goods manufactured for third parties are to be treated separately from the assessee's exempted clearances for its own products, and that once duty is paid on such branded goods, the inputs used therein remain eligible for CENVAT credit.

Conclusion: The assessee was entitled to CENVAT credit on the inputs used for branded goods, notwithstanding the availment of SSI exemption on its own products.

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