Cenvat credit on direct job-work inputs allowed where goods were purchased, processed, and used in manufacture.

Cenvat credit cannot be denied merely because inputs were sent directly to a job worker without first entering the assessee's factory. The Tribunal treated receipt in the factory as not determinative where the factual trail showed that the inputs were purchased by the assessee, sent for job work, returned after processing, and used in manufacture of the final product. It applied the settled approach that movement of inputs for job work supports credit entitlement when the goods are ultimately received back and used in production. On that basis, credit was held admissible and the denial of credit was unsustainable.

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Issues: Whether Cenvat credit can be denied merely because inputs were sent directly to the job worker without first being received in the assessee's factory.

Analysis: The dispute turned on the requirement of receipt of inputs in the factory under Rule 4(1) of the Cenvat Credit Rules, 2004. The Tribunal noted that the inputs were purchased by the assessee, sent directly for job work, and were thereafter received back after processing for use in manufacture. It relied on the settled view that, where inputs are meant for job work and the factual trail shows their use in the final product, credit cannot be denied merely because the goods did not physically enter the manufacturer's premises first. Reference was also made to the principle governing movement of inputs for job work under Rule 4(5)(a) of the Cenvat Credit Rules, 2002.

Conclusion: Cenvat credit was admissible and the denial of credit was unsustainable.

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