CENVAT credit verification and manufacturer-based excise liability shape the outcome on inputs and job-work made-ups.

CENVAT credit on duty-paid inputs was treated as admissible only after verification of the supporting invoices, and the credit issue was remanded to the original authority for fresh computation on an actual duty-paid basis. Duty on made-ups manufactured by job-workers could not be recovered from the appellant because excise liability attaches to the actual manufacturer, and ownership of the duty-paid fabrics did not shift that liability. The demand on the made-ups was therefore set aside, with consequential reconsideration of interest and penalty linked to the remaining credit dispute.

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Issues: (i) whether CENVAT credit on duty-paid inputs was to be allowed on actual basis and the matter remanded for verification of invoices; (ii) whether duty on made-ups manufactured by job-workers was recoverable from the appellant.

Issue (i): whether CENVAT credit on duty-paid inputs was to be allowed on actual basis and the matter remanded for verification of invoices

Analysis: The appellant did not dispute the duty liability on the garments and sought credit only on the basis of actual duty payment supported by invoices, instead of the deemed basis adopted below. The available material showed that the eligibility of credit depended upon verification of the invoices and computation of the net duty liability after such verification.

Conclusion: The issue was remanded to the original authority for examination of invoices and determination of admissible CENVAT credit on actual basis.

Issue (ii): whether duty on made-ups manufactured by job-workers was recoverable from the appellant

Analysis: The made-ups were manufactured by job-workers from duty-paid fabrics supplied by the appellant. The decisive consideration was that duty liability attaches to the manufacturer, and ownership of the input material does not alter that position. Since the appellant was not the manufacturer of the made-ups, the demand could not be sustained against it.

Conclusion: The demand on made-ups was set aside as unsustainable against the appellant.

Final Conclusion: The appeal succeeded to the extent of setting aside the demand on made-ups and obtaining remand on the credit issue, with consequential reconsideration of interest and penalty.

Ratio Decidendi: Excise duty liability is on the actual manufacturer, and CENVAT credit claims requiring invoice verification may be remanded for fresh determination on the basis of actual duty payment.

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