Cenvat credit on transferred finished goods denied where goods were not used in manufacture or returned for reprocessing.

Cenvat credit was not available on finished goods transferred from another unit and brought into the factory for sale, because the goods were neither used as inputs in or in relation to manufacture nor returned for reprocessing or reconditioning. Rule 3(1) of the Cenvat Credit Rules, 2004 permits credit only on inputs received for use in manufacture of final products, while Rule 16 of the Central Excise Rules, 2002 applies to duty-paid goods returned for reprocessing, reconditioning or similar treatment. On these facts, neither provision supported the credit, so the order allowing it was set aside and the Revenue's demand was restored.

---

---

Issues: Whether Cenvat credit was admissible on finished goods transferred from another unit and brought into the factory for sale, and whether such credit could be sustained when the goods were not used in or in relation to manufacture or returned for reprocessing or reconditioning.

Analysis: Rule 3(1) of the Cenvat Credit Rules, 2004 allows credit only on inputs received in the factory for use in or in relation to the manufacture of final products. Rule 16 of the Central Excise Rules, 2002 permits credit on duty-paid goods returned to the factory for reprocessing, reconditioning, or similar treatment. The goods in question were finished goods brought on stock transfer basis for sale, and there was no material to show that they were used in manufacture or subjected to any processing or reprocessing. In such circumstances, neither provision supported availment of credit.

Conclusion: The credit was not admissible, and the order allowing it was set aside in favour of the Revenue.

Final Conclusion: The assessee was not entitled to Cenvat credit on the transferred finished goods, and the original demand and consequential reliefs stood restored.

Ratio Decidendi: Cenvat credit is available only where the goods are used as inputs in or in relation to manufacture, or where finished goods are returned for reprocessing or reconditioning under the specific enabling provision.

---