Cenvat credit on job-work inputs need not be reversed when the finished goods are cleared on payment of duty.

Cenvat credit on inputs used in job work for others need not be reversed where the finished goods are cleared on payment of duty. The Tribunal treated the issue as settled by prior decisions, including Larger Bench reasoning in Sterlite Industries and Supreme Court-based authority followed in connected matters, and noted that similar demands against the same assessee had already been dropped. It also recorded that the Revenue's challenge had been weakened by the High Court's refusal to depart from Escorts Limited. On that basis, the assessee was held entitled to retain the credit and the Revenue's appeal failed.

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Issues: Whether the assessee was required to reverse Cenvat credit on inputs used in job work undertaken for others where the goods were cleared on payment of duty.

Analysis: The issue was treated as settled by prior Tribunal decisions and by the Supreme Court-based reasoning applied in earlier connected matters. The Commissioner (Appeals) had relied on the Larger Bench ruling in Sterlite Industries, and the Tribunal noted that similar demands against the same assessee had already been dropped in earlier proceedings. The Revenue's challenge was also weakened by the rejection of its appeal by the High Court, which found no reason to depart from the Supreme Court's decision in Escorts Limited.

Conclusion: The assessee was not required to reverse the Cenvat credit on the inputs used for the job work, and the Revenue's appeal failed.

Ratio Decidendi: Where inputs used in job work relate to goods cleared on payment of duty, the Cenvat credit taken on such inputs is allowable and need not be reversed.

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