Cenvat credit on job-work goods cleared under exemption notification remains admissible where settled precedent governs the issue.

Cenvat credit on inputs used in job-work manufacture of goods cleared under Notification No. 214/86-C.E. was treated as admissible because settled precedent, including Escorts Limited and allied High Court rulings, had already rejected denial of credit merely due to exemption from duty on the finished goods. The Tribunal's reliance on that precedent was upheld, and the Revenue's challenge to the credit was rejected.

---

---

Issues: (i) Whether Cenvat credit was admissible on inputs used in the manufacture of exempted goods cleared without payment of duty on job work basis under Notification No. 214/86-C.E. dated 25-3-1986; (ii) whether the Tribunal's reliance on the earlier line of decisions denying the Revenue's challenge was justified.

Issue (i): Admissibility of Cenvat credit depended on the treatment of goods manufactured on job work basis and cleared under the exemption notification. The question turned on whether the inputs used in such manufacture could be denied credit merely because the finished goods were cleared without payment of duty under the notification.

Analysis: The Court followed its earlier decision on a similar question, which in turn had relied on the decisions of the Bombay High Court, the Punjab and Haryana High Court, and the Supreme Court in Escorts Limited. On that basis, the legal position was treated as settled against the Revenue's contention.

Conclusion: Cenvat credit was held admissible, and the issue was decided in favour of the assessee and against the Revenue.

Issue (ii): Whether the Tribunal had correctly applied the earlier precedent in resolving the dispute.

Analysis: The Court found that the earlier decision on an identical question governed the present appeal and that the Revenue's attempt to distinguish the precedent did not alter the result.

Conclusion: The Tribunal's reliance on the precedent was upheld.

Final Conclusion: The appeal failed, and the Revenue's challenge to the grant of Cenvat credit was rejected.

Ratio Decidendi: Where inputs are used in job-work manufacture cleared under Notification No. 214/86-C.E. and the issue is covered by settled precedent, Cenvat credit cannot be denied merely because the finished goods are exempted from duty.

---