Modvat credit on common inputs for job-worked goods remains admissible where the principal manufacturer pays duty on final clearance.

Modvat credit on common inputs used in job-worked goods was treated as admissible where the final products were ultimately cleared by the principal manufacturer on payment of duty under Notification No. 214/86. The Tribunal noted that credit could not be denied merely because the goods were removed from the job worker's factory without duty under the notification. It also recorded that earlier Tribunal precedent had already settled the issue in favour of the assessee, making the point no longer res integra.

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Issues: Whether Modvat credit on common inputs used in goods manufactured on job work basis was admissible when the final products were cleared under Notification No. 214/86 and duty was paid by the principal manufacturer.

Analysis: The dispute turned on whether credit could be denied merely because the job-worked goods were cleared from the factory without duty under the notification and the relevant Modvat rules. The Tribunal noted that the final products were ultimately cleared by the principal manufacturer on payment of duty. It further held that the issue had already been settled in favour of the assessee by earlier Tribunal precedent and was no longer res integra.

Conclusion: The Modvat credit was admissible, and the denial of credit was unsustainable.

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