Cenvat credit for exported goods allowed where manufacturer status stood and the demand rested on an incorrect notice basis.

A demand based on the assumption that the assessee was only a job worker was held unsustainable because the show cause notice proceeded on a wrong footing and the challenge went beyond the notice's stated basis. The Tribunal also stated that, once the assessee was treated as the manufacturer, Cenvat credit on inputs used for exported goods was available under Rule 3(1) of the Cenvat Credit Rules, 2002. Exported goods were not treated as exempted goods, and reliance on Rule 6(1) was rejected. The Revenue's appeal failed on both procedural and substantive grounds, and the credit order was sustained.

---

---

Issues: (i) Whether the demand could be sustained when the show cause notice proceeded on the footing that the respondent was only a job worker; (ii) whether the respondent was entitled to Cenvat credit on inputs used in the manufacture of exported goods.

Issue (i): Whether the demand could be sustained when the show cause notice proceeded on the footing that the respondent was only a job worker.

Analysis: The notice was founded only on the premise that the respondent, being a job worker, was not liable in the manner alleged. The Tribunal held that this premise was incorrect because the respondent was not availing the benefit of Notification No. 214/86 and the demand was therefore built on a wrong basis. The appellate challenge also travelled beyond the very ground on which the notice had been issued.

Conclusion: The demand was not sustainable on this ground and the finding was in favour of the assessee.

Issue (ii): Whether the respondent was entitled to Cenvat credit on inputs used in the manufacture of exported goods.

Analysis: Once the respondent was treated as the manufacturer, credit was available under Rule 3(1) of the Cenvat Credit Rules, 2002. The goods manufactured were exported, and export goods cannot be treated as exempted goods. The Tribunal also accepted the interpretation of Notification No. 52/2000-CE dated 19.10.2000 and found no merit in the Revenue's reliance on Rule 6(1) of the Cenvat Credit Rules, 2002.

Conclusion: The respondent was entitled to Cenvat credit and the finding was in favour of the assessee.

Final Conclusion: The Revenue's appeal failed on both the procedural and substantive grounds, and the order allowing credit to the respondent was sustained.

Ratio Decidendi: A manufacturer exporting the goods is entitled to Cenvat credit on eligible inputs, and a demand cannot be sustained on a premise not set out in the show cause notice.

---