Cenvat credit on furnace oil for job-worked goods remains available, and re-credit is not defeated by unjust enrichment.

Cenvat credit on furnace oil used in job-work manufacture of goods cleared without payment of duty under Notification No. 214/86-CE was treated as admissible, and the assessee was held entitled to re-credit of the amount reversed, subject to verification of quantum. The Tribunal applied its earlier view that the Cenvat Credit Rules carve out an exception for fuel used as input, so credit is not denied merely because the finished goods are cleared without duty. The refund claim was also held not barred by unjust enrichment, because the claim fell within the statutory exception under Section 11B(2) for credit of duty and that position had already attained finality.

---

---

Issues: (i) Whether Cenvat credit of furnace oil used in manufacture of job-worked goods cleared without payment of duty under Notification No. 214/86-CE was admissible and whether the appellant was entitled to re-credit of the amount reversed. (ii) Whether the refund claim was barred by the principle of unjust enrichment.

Issue (i): Whether Cenvat credit of furnace oil used in manufacture of job-worked goods cleared without payment of duty under Notification No. 214/86-CE was admissible and whether the appellant was entitled to re-credit of the amount reversed.

Analysis: The dispute had already been examined in the appellant's own case. The earlier appellate order held that the Cenvat Credit Rules created an exception for fuel used as input and that credit on furnace oil used in job-work manufacture was not required to be reversed merely because the resultant goods were cleared without payment of duty. That view had been affirmed in the Revenue's appeal, and the Tribunal had expressly held that the respondent was entitled to take re-credit of the Cenvat credit in question.

Conclusion: The appellant was entitled to re-credit of the Cenvat credit reversed on furnace oil, subject to verification of the amount.

Issue (ii): Whether the refund claim was barred by the principle of unjust enrichment.

Analysis: The earlier appellate order had recorded a categorical finding that unjust enrichment did not apply because the claim fell within the exception under Section 11B(2) of the Central Excise Act, 1944 in relation to credit of duty. The Revenue had not raised any plea of unjust enrichment in the earlier appeal, and that position had attained finality in the connected proceedings.

Conclusion: The refund claim was not hit by unjust enrichment.

Final Conclusion: The appeal succeeded on the merits of entitlement to re-credit and on unjust enrichment, but the matter was sent back only for verification of the quantum of re-credit.

Ratio Decidendi: Cenvat credit on fuel used in job-worked goods is not denied merely because the final goods are cleared without payment of duty, and a refund or re-credit claim based on such reversed credit is not defeated by unjust enrichment where the claim falls within the statutory exception for credit of duty.

---