Cenvat credit for job-worker inputs depends on proof of dispatch and return within the prescribed period.

Cenvat credit under Rule 4(5)(a) was upheld for inputs, partially processed inputs and capital goods sent to a job-worker and received back within 180 days, because the challans and record established compliance with the prescribed movement and return requirements. Credit on inputs sent directly to the job-worker was held inadmissible where no challans or other evidence proved dispatch under the rule or receipt back within the stipulated period. The demand was therefore sustained only for that category, and the penalty was set aside.

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Issues: (i) whether Cenvat credit was admissible on inputs and capital goods sent to a job-worker and received back within the prescribed period under Rule 4(5)(a) of the Cenvat Credit Rules, 2004; (ii) whether Cenvat credit was admissible on inputs sent directly to the job-worker in the absence of evidence of receipt back within the prescribed period.

Issue (i): Whether Cenvat credit was admissible on inputs and capital goods sent to a job-worker and received back within the prescribed period under Rule 4(5)(a) of the Cenvat Credit Rules, 2004.

Analysis: The challans produced on record showed movement of inputs, partially processed inputs, and capital goods to the unit at Himachal Pradesh and their receipt back within 180 days. The documents were before the lower authorities, and the record supported compliance with the time limit and procedural requirement under Rule 4(5)(a).

Conclusion: Cenvat credit on this category was rightly available to the respondent and the demand on this issue was not sustainable.

Issue (ii): Whether Cenvat credit was admissible on inputs sent directly to the job-worker in the absence of evidence of receipt back within the prescribed period.

Analysis: For inputs sent directly to the job-worker, no challans or other evidence were produced to show movement under Rule 4(5)(a) or receipt back within 180 days. In the absence of supporting evidence, the requirement of the rule was not established.

Conclusion: Cenvat credit on this category was inadmissible and the demand was sustainable.

Final Conclusion: The appeal succeeded only on the issue of credit taken on inputs sent directly to the job-worker, while the credit relating to goods returned within the prescribed period was upheld in favour of the respondent; the penalty was set aside.

Ratio Decidendi: Cenvat credit under Rule 4(5)(a) is available only when the assessee proves, by proper challans or equivalent records, that goods sent to a job-worker are received back within the prescribed period.

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