Simultaneous Modvat credit and small-scale exemption remain permissible for different products under separate tariff headings.

Where different products are cleared under different tariff headings, simultaneous availment of Modvat credit on one product and full small-scale exemption on another product is permissible. The Tribunal noted that this position had already been settled by earlier decisions, including subsequent approval by the Supreme Court of the Revenue's challenge, and that later decisions had followed the same view. On that settled legal basis, no reason existed to disturb the lower appellate order, and the assessee remained entitled to claim Modvat credit for one product while availing the exemption for the other.

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Issues: Whether an assessee manufacturing goods under different tariff headings could simultaneously avail Modvat credit on one product while claiming full small-scale exemption under the relevant notification on another product.

Analysis: The Tribunal noted that the question had already been settled in earlier decisions holding that simultaneous availment of Modvat credit and full exemption was permissible where the goods in question fell under different headings. It also noted that the Revenue's challenge to the earlier Tribunal view had been dismissed by the Supreme Court, and that the same view had been followed subsequently. In light of this settled position, no basis was found to interfere with the lower appellate order.

Conclusion: The assessee was entitled to simultaneously avail Modvat credit on one product and full exemption on another product under the notification.

Ratio Decidendi: Where different products are cleared under different tariff headings, simultaneous availment of Modvat credit on one product and exemption under the small-scale exemption notification on another is permissible.

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