SSI exemption and Cenvat credit: branded and export clearances did not by themselves deny domestic exemption, subject to turnover verification.

Goods manufactured under another person's brand name were treated as outside the small scale industry exemption, so duty remained payable on those branded clearances. However, Cenvat credit taken on inputs used for branded goods and export goods did not by itself disentitle the assessee from SSI exemption for its own domestic clearances. The turnover and exemption eligibility had to be examined unit-wise and re-verified by the jurisdictional officer, with recovery confined to any short payment found on such verification.

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Issues: Whether the assessee was disentitled to small scale industry exemption under Notification No. 8/2003-CE merely because it had availed Cenvat credit in respect of inputs used for manufacture of goods bearing another person's brand name and for export, and whether the turnover for domestic clearances required re-verification.

Analysis: Goods manufactured with another person's brand name were held to be outside the ambit of the small scale industry exemption, and therefore duty was payable on such clearances. Credit taken on inputs used for those branded goods, as well as for export goods, could not be used to deny exemption for the domestic clearances of the assessee's own goods. The relevant turnover and eligibility for exemption had to be examined unit-wise and re-verified by the jurisdictional officer, and only any short payment so found could be recovered.

Conclusion: The assessee was not denied SSI exemption merely because it had availed Cenvat credit for branded and export clearances, and the Revenue's appeal failed.

Final Conclusion: The exemption entitlement for domestic clearances remained intact subject to verification of turnover, and the Revenue's challenge was rejected.

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