Capital goods credit for job workers cleared under Notification 214/86-CE remains admissible despite exempted-goods objection.

Capital goods credit under Rule 4(6) of the Cenvat Credit Rules, 2004 was held admissible to a job worker operating under Notification No. 214/86-CE. The Tribunal stated that the job-work notification and the bar on credit for capital goods used exclusively in exempted manufacture operate in different fields, and that "exclusively" requires sole and complete use in exempted production. Credit could not be denied merely because the processed goods were cleared without duty under the notification, where the work was carried out for further use in the manufacture of dutiable final products. Revenue's objection was rejected.

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Issues: Whether capital goods credit under Rule 4(6) of the Cenvat Credit Rules, 2004 was admissible to a job worker operating under Notification No. 214/86-CE when the goods processed were treated as exempted goods for the purpose of the Revenue's objection.

Analysis: The notification governing job work and the rule denying credit on capital goods used exclusively in the manufacture of exempted goods operate in different fields. The expression "exclusively" requires sole and complete use in exempted production, and credit cannot be denied merely because the job-worked goods are cleared without duty under the notification, especially when the process is undertaken for further use in the manufacture of dutiable final products. The Tribunal relied on the settled principle that use of capital goods in such a setting does not attract the bar under the credit rule.

Conclusion: The capital goods credit was admissible, and the Revenue's appeal was rejected.

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