Cenvat credit on export goods remains admissible where the manufacturer is treated as the job worker and inputs are duty-paid.

Where a job worker is not operating under Notification No. 214/86, it is treated as the manufacturer and may avail Cenvat credit on duty-paid inputs used in manufacture. The demand based solely on the assumption that job-work status barred credit was therefore unsustainable. Export of the manufactured goods did not make them exempted goods, because export goods are not treated as exempted for denying credit. On that basis, the interpretation of Notification No. 52/2000-CE was upheld and credit was held admissible.

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Issues: (i) Whether the respondent, treated as a job worker, was disentitled to Cenvat credit under the Cenvat Credit Rules, 2002; (ii) Whether export of the manufactured goods made the goods exempted so as to deny credit.

Issue (i): Whether the respondent, treated as a job worker, was disentitled to Cenvat credit under the Cenvat Credit Rules, 2002.

Analysis: The demand in the show cause notice rested only on the assumption that the respondent was merely a job worker and therefore the goods manufactured by it need not suffer duty. That premise was found to be incorrect because the respondent was not availing the benefit of Notification No. 214/86. Once treated as the manufacturer, the respondent was entitled to avail credit on the duty-paid inputs received for manufacture.

Conclusion: The respondent was not disentitled to Cenvat credit on the ground that it was a job worker.

Issue (ii): Whether export of the manufactured goods made the goods exempted so as to deny credit.

Analysis: The goods manufactured were exported, and therefore no question of exemption from duty arose. Export goods cannot be treated as exempted goods. The interpretation placed on Notification No. 52/2000-CE was also upheld, and on that basis the availment of credit was found to be proper.

Conclusion: Export of the goods did not render them exempted, and credit could not be denied on that ground.

Final Conclusion: The Revenue's challenge failed both on the footing of the show cause notice and on merits, and the assessee's entitlement to credit was upheld.

Ratio Decidendi: Where goods are manufactured for export and the recipient is treated as the manufacturer, Cenvat credit on duty-paid inputs is admissible, and exported goods are not to be treated as exempted goods for denying such credit.

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