Revenue-neutral Cenvat credit on job-worked goods supported waiver of pre-deposit for the assessee.

Goods sent to a job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 and duty paid by the job worker on the processed goods were treated as revenue neutral where the principal manufacturer claimed credit of that duty. Credit was held admissible even though the duty may not have been payable, and an earlier Tribunal decision on an identical arrangement supported the same view. On that basis, waiver of pre-deposit was granted and the stay applications were allowed in favour of the assessee.

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Issues: Whether the appellants were entitled to waiver of pre-deposit where the job worker had paid duty on the processed goods and the credit was claimed on the duty so paid.

Analysis: The goods were sent to the job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004. The job worker paid duty on the processed goods, and the principal manufacturer availed credit of that duty. The situation was held to be revenue neutral, and it was noted that credit of duty paid, though not payable, is admissible. An earlier Tribunal order dealing with an identical arrangement had already taken the same view in favour of the assessee.

Conclusion: Waiver of pre-deposit was granted and both stay applications were allowed in favour of the assessee.

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