Cenvat credit on job-work processed fabrics remains admissible when duty is paid, invoiced, and used in manufacture.

Cenvat credit was treated as admissible to a principal manufacturer on duty-paid processed fabrics received back from a job worker, where the goods were sent under Rule 12B of the Central Excise Rules, 2002 and returned under regular invoices under Rule 11. The credit requirement was satisfied because the processed fabrics were received duty paid and used in manufacture of the final product. An objection that the job worker's duty payment was unauthorised did not defeat credit, as collection without authority of law is inconsistent with Article 265 and the duty had been reflected in the invoices. Any refund issue would still be subject to unjust enrichment.

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Issues: Whether Cenvat credit was admissible to the principal manufacturer on duty paid by a job worker on processed fabrics, even though the revenue contended that such duty payment was not authorised by law.

Analysis: The fabrics were sent to the job worker under Rule 12B of the Central Excise Rules, 2002 and were returned under regular invoices under Rule 11 of the Central Excise Rules, 2002, corresponding to Rule 52A of the Central Excise Rules, 1944. The processed fabrics were received duty paid and were used in the manufacture of the final product. The essential requirements for availing Cenvat credit were therefore satisfied. The objection that the duty payment by the job worker was unauthorised did not defeat credit, because collection without authority of law is inconsistent with Article 265 of the Constitution of India, and the duty amount had in fact been collected and reflected in the invoices. The possibility of double benefit was addressed by the safeguard that any refund claim by the job worker would have to overcome the question of unjust enrichment and the fact of credit availed by the appellant.

Conclusion: Cenvat credit was admissible to the appellant on the duty paid processed fabrics received from the job worker.

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