Cenvat credit remains available for direct dispatch to job workers where export procedures are duly followed.

Cenvat credit was held admissible where duty-paid inputs were sent directly to a job worker under the applicable circular procedure, the resultant goods were manufactured and exported under bond, and the jurisdictional excise officers had granted permission. Direct receipt of inputs in the assessee's factory was not required, and the fact that finished goods were cleared from the job worker's premises did not by itself justify denial of credit. Non-intimation to the department was treated as a technical lapse rather than a substantive breach. As the credit was allowable, the demand for duty, interest and penalty also could not be sustained.

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Issues: Whether Cenvat credit was deniable on inputs directly sent to the job worker's premises and on the resultant goods exported from there, and whether the demand, interest and penalty could be sustained.

Analysis: The credit was disallowed by the lower authority only because the inputs were not first received in the assessee's factory and the finished goods were not brought back before export. The record showed that the inputs were duty paid, were sent to the job worker under the departmental circular procedure, and the resultant goods were cleared for export under bond with permissions from the jurisdictional excise officers. The governing Cenvat provisions did not prohibit direct dispatch of inputs to a job worker, and the fact that the goods were not returned to the factory did not by itself justify denial of credit when the procedural requirements were otherwise satisfied. The omission to intimate the department was treated as a technical lapse, not a substantive breach. As the credit itself was held admissible, the foundation for demand of interest and penalty also fell.

Conclusion: Cenvat credit was admissible to the assessee, and the demand of duty, interest and penalty could not be sustained.

Final Conclusion: The assessee was entitled to retain the credit and the impugned order confirming recovery and penalty was set aside with consequential relief.

Ratio Decidendi: Where duty-paid inputs are sent directly to a job worker in accordance with the applicable circular and the goods are used in manufacture and exported under bond, Cenvat credit cannot be denied merely because the inputs were not physically received in the assessee's factory or because the finished goods were cleared from the job worker's premises.

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