Cenvat credit for job workers using common inputs upheld for the pre-2003 period despite absence of Rule 12B.

A job worker using common inputs on which Cenvat credit was taken could retain that credit for the period before 1-4-2003, even though Rule 12B of the Central Excise Rules, 2002 was not then in force. The Tribunal treated the issue as covered against the Revenue by the Larger Bench ruling in Sterlite Industries, as upheld by the Bombay High Court, and noted that the principle was consistent with the Supreme Court's approach. It further held that earlier Rule 57C was pari materia with Rule 6(1) of the Cenvat Credit Rules, 2001/2002, so the same credit principle applied to the disputed period. The demand was therefore unsustainable.

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Issues: Whether a job worker, who uses his own inputs in processing goods received from the principal manufacturer and clears the job-worked goods without payment of duty to the principal manufacturer, is entitled to retain Cenvat credit for the period prior to 1-4-2003 when Rule 12B of the Central Excise Rules, 2002 was not in force.

Analysis: For the relevant period, the respondent processed goods received from principal manufacturers by using common inputs on which Cenvat credit had been taken. The dispute turned on whether the absence of Rule 12B for the earlier period disabled the respondent from claiming the benefit of the credit regime. The Tribunal held that the controversy was covered against the Revenue by the Larger Bench ruling in Sterlite Industries, which had been upheld by the Bombay High Court and was consistent with the principle laid down by the Supreme Court. It also held that the earlier Rule 57C was pari materia with Rule 6(1) of the Cenvat Credit Rules, 2001/2002, so the legal principle applied equally to the period in dispute.

Conclusion: The respondent was entitled to Cenvat credit and the demand was not sustainable.

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