CENVAT credit on job worker duty-paid intermediates remains available when processed goods return for manufacture.

CENVAT credit on duty paid by a job worker on intermediate goods could not be denied merely because the principal had already taken credit on the original inputs. Inputs were sent for processing under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, the processed goods were received back and used in manufacture, and the rule did not require the job worker to operate only under Notification No. 214/86-C.E. Since the job worker voluntarily discharged duty on the intermediates, that duty remained eligible for credit. Denial of credit was therefore unsustainable.

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Issues: Whether CENVAT credit of duty paid by a job worker on intermediate goods cleared after processing of inputs sent by the appellant could be denied on the ground that the appellant had already taken credit on the original inputs.

Analysis: The inputs had been sent to the job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 and the processed goods were received back and used in the manufacture of final products. The rule permits sending inputs or capital goods to a job worker for further processing and does not require the job worker to necessarily avail the exemption under Notification No. 214/86-C.E. Where the job worker chooses to pay duty on the intermediate products on the basis of the value including cost of inputs and job charges, that duty cannot be denied merely because credit had already been taken on the original inputs.

Conclusion: The denial of CENVAT credit was unsustainable and the assessee was entitled to the credit.

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