SSI status governs deemed Modvat credit eligibility even after crossing the clearance threshold.

A small scale industrial unit retained eligibility for deemed Modvat credit after its aggregate clearances crossed the Rs. 75 lakh threshold because the benefit depended on SSI status, not on loss of that status merely by crossing the clearance limit. The Tribunal applied its earlier view that Notification No. 1/93 and the related Government order were intended for manufacturers continuing within the SSI category, and that the crossing of clearances did not by itself terminate the benefit. The unit was therefore entitled to continue availing deemed Modvat credit.

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Issues: Whether a small scale industrial unit could continue to avail deemed Modvat credit after crossing the aggregate value of clearances of Rs. 75 lakhs.

Analysis: The deemed Modvat credit facility under the Government order was intended for manufacturers having the status of an SSI unit and availing the benefit of Notification No. 1/93. The unit's character as an SSI unit did not change merely because its clearances exceeded Rs. 75 lakhs. The Tribunal followed its earlier view that the eligibility to the deemed credit benefit depended on SSI status and not on loss of that status after crossing the clearance threshold, so long as the unit remained within the category covered by the order.

Conclusion: The unit was entitled to deemed Modvat credit even after crossing the aggregate value of clearances limit of Rs. 75 lakhs.

Ratio Decidendi: Eligibility for deemed Modvat credit under the relevant Government order turns on the assessee's SSI status, and crossing the clearance threshold of Rs. 75 lakhs does not by itself terminate that status for the purpose of the benefit.

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