Cenvat credit on capital goods upheld where job-worker movement records showed traceable receipt and substantial procedural compliance.

Cenvat credit on capital goods was sustained where the goods were sent directly to a job worker, then received back in the manufacturer's factory and used in the manufacture of excisable goods. The record of invoices, challans, payment particulars and movement registers showed traceability of the goods and substantial compliance with the job-worker procedure under Rule 4(5)(a) of the Cenvat Credit Rules, 2002. Credit could not be denied merely because the goods were first delivered to the job worker's premises, as no substantive breach of the rule was established.

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Issues: Whether Cenvat credit on capital goods was admissible when the goods were sent directly to a job worker and were later received back in the factory and used in the manufacture of excisable goods.

Analysis: The relevant invoices, challans, payment records, and movement registers were examined by the adjudicating authority. It was found that the capital goods were in fact received back in the factory and used for processing of excisable goods. The record also showed substantial compliance with the procedure for sending goods to a job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2002. The view taken in appeal that credit could be denied merely because the goods were first delivered to the job worker's premises was not accepted, since the applicable rule was not shown to have been violated in substance.

Conclusion: Cenvat credit could not be denied on the facts of the case, and the order disallowing credit was set aside.

Ratio Decidendi: Where capital goods are traceable through proper records, are received back in the manufacturer's factory, and are used in the manufacture of excisable goods, substantial compliance with the job-worker procedure under the Cenvat Credit Rules is sufficient to sustain the credit.

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