Cenvat credit on job-work inputs allowed where duty-paid yarn moved under assessee invoices and was used in manufacture.

Cenvat credit on duty-paid single yarn was allowed where the yarn was actually used in the manufacture chain and sent to job workers for conversion into double yarn. The assessee's own invoices, read with delivery challans, were accepted as proper duty-paying documents for the movement of goods, and the intermediate double yarn received back from the job workers did not break the credit chain. Following an earlier Bench view, the disallowance was set aside and credit was held admissible merely because the job-work movement was supported by the assessee's invoices.

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Issues: Whether Cenvat credit of duty paid on single yarn could be denied merely because the credit was taken on the basis of the assessee's own invoices covering despatch of the goods to job workers for conversion into double yarn.

Analysis: The input single yarn was duty paid and used in the manufacture chain leading to the final product. The doubled yarn received back from the job workers was an intermediate product, and the invoices issued by the assessee for despatch of the single yarn to the job workers were treated as proper duty-paying documents. The same question had already been decided by the Bench in favour of the assessee, and that reasoning was followed. The credit was held to be admissible on the strength of the invoices issued by the assessee, coupled with delivery challans and the subsequent use of the goods in manufacture.

Conclusion: Cenvat credit could not be denied on the ground that the assessee used its own invoices for the job-work movement of the input, and the issue was decided in favour of the assessee.

Final Conclusion: The impugned disallowance was set aside and the assessee was held entitled to the credit claimed.

Ratio Decidendi: Where duty-paid inputs are actually used in the manufacturing chain, Cenvat credit cannot be denied merely because the movement of goods to and from job workers was evidenced by the assessee's own invoices and allied delivery documents.

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