Deemed Modvat credit stays available to small-scale manufacturers after crossing the clearance threshold under Notification No. 1/93.

A small-scale manufacturer availing Notification No. 1/93-Central Excises remained eligible for deemed Modvat credit under the Government order issued under Rule 57G(2) even after crossing the Rs. 75 lakhs clearance limit during the financial year. The crossing of that slab did not change the manufacturer's status for the year; it only required duty at the normal rate on clearances above the threshold. The deemed credit was linked to the unit's eligibility under Notification No. 1/93, not to concessional duty on every clearance throughout the year.

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Issues: Whether a small-scale industry manufacturer who avails the benefit of Notification No. 1/93-Central Excises remains eligible for deemed Modvat credit under the Government order issued under Rule 57G(2) of the Central Excise Rules, 1944 after crossing the Rs. 75 lakhs clearance limit during the financial year.

Analysis: The facility of deemed Modvat credit was extended to the class of manufacturers who were operating under Notification No. 1/93 and satisfied its prescribed criteria. Crossing the Rs. 75 lakhs slab did not alter the character of the manufacturer or take the unit outside the category for the year in question; it only required duty at the normal rate on clearances beyond that threshold. The benefit under the Government order was linked to the status of being a manufacturer availing Notification No. 1/93, not to the continuance of concessional duty on every clearance throughout the year.

Conclusion: The deemed Modvat credit remained available even after the assessee crossed the Rs. 75 lakhs limit, and the Revenue's appeal was correctly rejected.

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