Modvat credit and SSI exemption can be claimed on different goods by the same assessee when products are distinct.

An assessee manufacturing distinct commodities in separate units may choose Modvat credit on one product and small scale industry exemption on another, provided both benefits are not claimed for the same goods. The Tribunal followed its earlier rulings and the affirmed Supreme Court view that the relevant test is whether the items are different and separately identified under different chapter headings. On the stated facts, the two units dealt with different products, so simultaneous availment of the two benefits was permissible.

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Issues: Whether an assessee manufacturing different goods in separate units can avail Modvat credit on one commodity and small scale industry exemption under Notification No. 175/86 on another commodity.

Analysis: The Tribunal followed its earlier decisions and the affirmed view of the Apex Court that where an assessee manufactures two or more items under different chapter headings, the choice lies with the assessee to take Modvat credit on one item and claim SSI exemption on another, provided the benefits are not claimed for the same goods. The present facts fell within that principle because the two units dealt with different products.

Conclusion: The issue is decided in favour of the assessee, and simultaneous availment of Modvat credit and SSI exemption on different goods is permissible.

Ratio Decidendi: An assessee manufacturing distinct commodities may lawfully choose to avail Modvat credit on one product and SSI exemption on another, so long as both benefits are not claimed in respect of the same item.

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