Cenvat credit on coal washery loss remains admissible where input loss is inevitable during manufacturing process.

Cenvat credit on coal sent for washing was held to be admissible on the full quantity received, including the portion lost as washery loss. Coal washing was treated as an indispensable step for use in sponge iron manufacture, and the loss at the job worker's end was regarded as inevitable wastage beyond the assessee's control. Relying on earlier Tribunal decisions and the Board's circular, the position stated is that credit cannot be denied merely because inputs suffer waste or invisible loss during the manufacturing process, so disallowance of credit on the lost quantity was unjustified.

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Issues: Whether Cenvat credit was admissible on the full quantity of coal received for washing, including the quantity lost as washery loss and not received back in the factory.

Analysis: Washing of coal was an indispensable step for its use in manufacturing sponge iron. The loss occurred during the washing process at the job worker's end and was an inevitable wastage beyond the control of the assessee. The issue had already been settled by earlier Tribunal decisions and supported by the Board's circular clarifying that credit cannot be denied merely because part of the inputs is lost as waste or in invisible losses during the process of manufacture.

Conclusion: Credit on the full quantity of coal could not be denied merely because a portion was lost during washing, and the disallowance was unjustified.

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