SSI exemption remains available on own-brand clearances when separate records are kept and no credit is taken on exempt inputs.

An assessee under the SSI exemption scheme can claim exemption on own-brand clearances where separate records are maintained and no input credit is taken on inputs used for those exempt goods, even if credit is taken on inputs used for separately identifiable dutiable goods manufactured for others. The CESTAT applied this principle to hold that credit availed only for inputs used in goods bearing others' brand names did not, by itself, defeat the exemption for own-brand goods. The demand was therefore unsustainable, the impugned order was set aside, and the appeal was allowed with consequential relief.

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Issues: Whether the assessee, having maintained separate records and taken credit only on inputs used for goods manufactured for others, could still claim SSI exemption on goods cleared under its own brand name under Notification No. 8/2003-CE.

Analysis: The assessee manufactured goods under its own brand name as well as under the brand name of others and maintained separate records for the inputs used in each stream of production. Credit was availed only in respect of inputs used for goods bearing others' brand names, on which duty was paid. On these facts, there was no availed credit on inputs used for goods cleared under the SSI exemption notification. The decision followed the principle that where separate accounts are kept and credit is not taken on inputs used for exempted own-brand clearances, the SSI benefit cannot be denied merely because credit is taken for other dutiable clearances.

Conclusion: The assessee was entitled to SSI exemption, and the demand was not sustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: An assessee under an SSI exemption scheme may validly claim the exemption on own-brand clearances if it maintains separate records and does not take credit on inputs used for those exempt clearances, even while availing credit on inputs used for separately identifiable dutiable goods manufactured for others.

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