Cenvat credit on fuel used in job-work manufacture remains admissible where the final products are cleared on payment of duty.

Cenvat credit on fuel used by a job worker was held admissible where the processed goods ultimately formed part of final products cleared on payment of duty. The Tribunal applied the settled principle that credit is denied when inputs are used in exempted final products, but remains available when those inputs contribute to dutiable output. It treated the denial provisions for exempted goods and the provisions concerning common inputs for exempted and dutiable goods as similarly worded, and found no bar merely because the goods were cleared under a job-work exemption arrangement.

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Issues: Whether Cenvat credit was admissible on fuel used by a job worker in the manufacture of goods when the processed goods were cleared to the principal manufacturer under an exemption notification and the principal manufacturer cleared the final product on payment of duty.

Analysis: The issue was treated as settled by the earlier High Court decision, which held that credit is not available on inputs used in the manufacture of exempted final products, but is admissible where the inputs or fuel are used in manufacturing goods that ultimately form part of final products on which duty is payable. The Tribunal noted that the provisions governing denial of credit and those dealing with common inputs for exempted and dutiable goods were similarly worded, and applied that principle to the job-work arrangement in question.

Conclusion: The question was answered in favour of the assessee, and Cenvat credit on the fuel was held admissible.

Ratio Decidendi: Cenvat credit on fuel or other inputs used in the manufacture of goods is admissible where the processed goods ultimately contribute to dutiable final products, and denial provisions for exempted goods do not apply merely because the goods are cleared under a job-work exemption arrangement.

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