Duty credit reversal cannot defeat excise liability where finished goods made through job workers remain taxable on clearance.

An assessee that availed duty credit on inputs for goods manufactured through job workers could not escape duty on clearance of the finished goods by later reversing that credit. The credit taken under the job-work arrangement was intended to be adjusted against duty on the final product, and the earlier adoption of that procedure fixed the tax position. Because the job workers were SSI units enjoying exemption, the duty liability did not shift to them. The finished goods were treated as accessories liable to duty on clearance by the assessee, and the subsequent reversal of credit did not extinguish that liability.

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Issues: Whether the assessee, having availed duty credit on inputs under Rule 57F(2) of the Central Excise Rules for goods manufactured through job workers, could avoid duty on clearance of the finished goods by later reversing the credit.

Analysis: The arrangement adopted by the assessee treated it as the principal manufacturer, with the inputs purchased and sent to job workers for manufacture and return. The credit taken on inputs was meant to be adjusted only against duty payable on the final product under Rule 57A of the Central Excise Rules. The later reversal of credit did not alter the legal position created by the earlier adoption of the job-work procedure, and the job workers, being SSI units enjoying exemption, were not the persons on whom the duty liability fell. The finished goods were held to be accessories liable to duty on clearance by the assessee.

Conclusion: The assessee remained liable to pay duty on the MTRs cleared by it, and the subsequent reversal of credit did not absolve that liability.

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