CENVAT credit for job-work garment manufacture was held prima facie sustainable despite inputs not physically moving from the premises.

Rule 12B of the Central Excise Rules, 2002 was read to permit readymade garments to be manufactured on a registered person's account by a job worker, including arrangements where inputs are caused to be supplied under the prescribed documentation. The tribunal noted that the raw material was retained by a sister concern for job work rather than physically moved from the appellants' premises, but held the phrase "cause to supply" could cover that factual arrangement. On the material before it, the claim to CENVAT credit and consequential refund was found prima facie sustainable, supporting waiver of pre-deposit and stay of recovery.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery by claiming CENVAT credit on fabrics used for garments manufactured through job work under Rule 12B of the Central Excise Rules, 2002.

Analysis: Rule 12B permits a registered person to get readymade garments manufactured on his account by a job worker and contemplates supply, or causing supply, of inputs to such job worker under the prescribed documentation. The dispute arose because the raw material was retained by the sister concern for job work rather than being physically moved from the appellants' premises. The expression 'cause to supply' in sub-rule (3), read with the scheme of sub-rules (3) and (4), was held to be capable of covering this factual arrangement. On the material available, the appellants' claim to CENVAT credit and consequential refund was found to be prima facie sustainable.

Conclusion: The appellants were held entitled to waiver of pre-deposit and stay of recovery.

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