Cenvat credit on duty-paid tea used for blending is available when the blended product is cleared on duty and no revenue loss arises.

Duty-paid tea purchased from outside and blended with an assessee's own manufactured tea can qualify as an input for Cenvat credit where the blended product is cleared on payment of excise duty on the entire quantity. On the stated facts, the bought-out tea formed part of the final dutiable product and was used in the manufacturing stream, so credit on the duty-paid input was available. The view that blending did not amount to manufacture did not, by itself, defeat the credit claim when duty had been paid on the blended tea and no revenue loss arose.

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Issues: Whether duty-paid tea brought from outside and blended with the assessee's own manufactured tea qualified as input for Cenvat credit under the Central Excise Rules, and whether the blended tea cleared on payment of duty entitled the assessee to credit without revenue loss.

Analysis: The duty-paid tea purchased from outside was blended with the assessee's own manufactured tea, and the resultant blended tea was cleared on payment of excise duty on the entire quantity. On these facts, the bought-out tea formed part of the final dutiable product and was used as an input in the manufacturing stream for the blended tea. Since credit was taken only on duty-paid inputs and duty was paid on the final blended product, there was no revenue loss. The reasoning adopted by the lower authority that blending did not amount to manufacture did not defeat the credit claim on the facts of the case.

Conclusion: The assessee was entitled to Cenvat credit on the duty paid on the purchased tea used for blending.

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