Job work input credit: short delay in returning inputs did not justify denial where goods were ultimately received back and used in manufacture.

Credit of duty on inputs sent to a job worker could not be denied merely because they were received back after the prescribed 180-day period, where the delay was only 5 to 27 days. The rule on return of inputs after job work had to be read with the allied MODVAT provisions on reversal and re-credit, and the decisive factor was that the inputs were ultimately received back in full and used in manufacture. On that construction, a short delay in return did not defeat entitlement to credit, and the credit was allowable to the assessee.

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Issues: Whether credit of duty was rightly denied on the ground that inputs sent to a job worker were received back after expiry of 180 days.

Analysis: The disputed inputs were admittedly sent for job work and received back in the factory with only a short delay of 5 to 27 days. The rule relating to return of inputs after removal for job work had to be read along with the allied MODVAT provisions governing reversal and re-credit. On that construction, where the inputs are ultimately received back in full and used in manufacture, the delayed receipt by a few days does not justify denial of credit.

Conclusion: Denial of credit was not justified and the credit was allowable to the assessee.

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