CENVAT credit on job-work inputs remained admissible despite an accounting timing mismatch, as records confirmed return after processing.

CENVAT credit was admissible on inputs sent directly to a job worker for processing where the job work challans and supporting records showed dispatch and receipt back of the processed goods within the prescribed framework. Rule 4(5)(a) of the Cenvat Credit Rules, 2004 was applied on the basis that the goods were admittedly sent for job work and duly correlated on return, so a timing mismatch in the accounting entry for credit did not by itself justify denial. The denial of credit was therefore unsustainable and relief was allowed to the assessee.

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Issues: Whether CENVAT credit was admissible on inputs sent directly to a job worker and received back after processing, despite the credit entry being taken earlier than the receipt-back date.

Analysis: Rule 4(5)(a) of the Cenvat Credit Rules, 2004 permits credit when inputs are sent to a job worker for further processing and the records, challans or other documents establish that the goods are received back within the prescribed time. The disputed goods were admittedly sent to the job worker, job work challans were prepared, and the processed goods were received back and correlated with the inputs. In these circumstances, the mere timing discrepancy in accounting entries did not justify denial of credit.

Conclusion: CENVAT credit was admissible and the denial was unsustainable, in favour of the assessee.

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