Tribunal grants CENVAT Credit on job-worked goods, rejecting Department's stance.

The Tribunal allowed the appeal, setting aside the order disallowing CENVAT Credit of Rs. 71,80,949/-, interest, and penalty. It held that the appellant was entitled to CENVAT Credit for input services used in manufacturing job-worked goods exempted under Notification No. 214/86 CE. The Tribunal emphasized that the appellant, as a job worker, is considered a manufacturer, making them eligible for the credit, contrary to the Department's argument that the credit was inadmissible.

---

---

Issues:
Admissibility of CENVAT Credit for input services in the manufacture of job-worked goods exempted under Notification No. 214/86 CE.

Analysis:
The appellant filed an appeal against an order disallowing CENVAT Credit of Rs. 71,80,949/-, along with interest and penalty, under the CENVAT Credit Rules, 2004. The issue revolved around the appellant's factory manufacturing goods on a job work basis and the admissibility of CENVAT Credit on input services used for such manufacturing. The Department contended that the appellant's CENVAT Credit on service tax for input services used in job work manufacturing was not admissible under Rule 6(1) of the CENVAT Credit Rules, 2004. Additionally, the Department argued that the appellant rendered 'Business Auxiliary Service' to its own factory, making the CENVAT Credit inadmissible.

The appellant's representative relied on legal precedents, including the Sterlite Industries case, to support their argument that CENVAT Credit for input services should be allowed even for goods cleared under exemption notifications. The Revenue's representative contended that no service tax was payable on processes amounting to manufacture, and thus, the service tax credit for exempted services was not admissible.

The Tribunal analyzed the case laws cited by both sides and concluded that the issue was settled by the Larger Bench in the Sterlite Industries case. It was held that the appellant was entitled to CENVAT Credit for input services used in manufacturing job-worked goods exempted under Notification No. 214/86 CE. The Tribunal emphasized that a job worker is considered a manufacturer, not a service provider, and hence, the appellant's job work activity amounted to manufacturing, making them eligible for the CENVAT Credit.

In light of the above observations, the Tribunal allowed the appeal by setting aside the order disallowing the CENVAT Credit. The judgment clarified the admissibility of CENVAT Credit for input services in the manufacturing of job-worked goods exempted under Notification No. 214/86 CE, emphasizing the appellant's status as a manufacturer in the job work process.

---