Deemed credit for small scale units continued after crossing the exemption limit once full duty payment began.

Deemed credit under the Ministry of Finance order remained admissible to a small scale unit even after its clearances crossed the exemption limit, once the unit began paying full duty. The Tribunal followed its earlier view that the deemed credit scheme continued to apply in that regime and found no infirmity in the Commissioner (Appeals)' order allowing credit. The Revenue's challenge was rejected, and the assessee's eligibility to deemed credit was sustained notwithstanding crossing the small scale exemption threshold.

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Issues: Whether deemed credit under Ministry of Finance Order No. TS/36/94-TRU dated 01-03-1994 remained admissible to a small scale unit after its clearances crossed Rs. 75 lakhs and the unit started paying full duty.

Analysis: The Tribunal followed its earlier view that the deemed credit scheme continued to operate for small scale units even after the exemption limit of Rs. 75 lakhs was crossed, once the unit entered the regime of full duty payment. In view of that settled position, no infirmity was found in the order of the Commissioner (Appeals) allowing the credit.

Conclusion: Deemed credit remained admissible even after crossing the exemption limit, and the Revenue's appeals were rejected.

Final Conclusion: The assessee retained eligibility to deemed credit notwithstanding crossing the small scale exemption limit, and the appellate order in its favour was sustained.

Ratio Decidendi: Deemed credit under the Ministry's order continues to be admissible to a small scale unit after crossing the exemption limit when the unit starts paying full duty.

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