Cenvat credit for job-workers under Notification 214/86-CE upheld where inputs are used in manufacture and duty is paid by principal.

A job-worker manufacturing intermediate goods under Notification No. 214/86-CE was entitled to Cenvat credit on inputs directly purchased and used in manufacture, because the Larger Bench ruling in Sterlite Industries allowed such credit even where duty was discharged by the principal manufacturer. Goods cleared under that notification were not treated as an exempted final product, so denial of credit was unsustainable. The order also reaffirmed that lower authorities must follow binding precedents on identical questions of law under the principle of judicial discipline.

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Issues: Whether a job-worker is entitled to Cenvat credit on inputs directly purchased and used in the manufacture of intermediate goods when the goods are cleared under Notification No. 214/86-CE and duty is paid by the principal manufacturer.

Analysis: The issue was governed by the Larger Bench decision in Sterlite Industries, which held that credit on inputs used by a job-worker in manufacturing finished goods is admissible even where duty is discharged by the principal manufacturer. The order also followed the view that goods cleared as job-work under Notification No. 214/86-CE do not fall within the expression "exempted final product". In addition, the principle of judicial discipline required the lower authority to follow binding decisions of higher forums on identical questions of law.

Conclusion: The job-worker was eligible to take Cenvat credit on the inputs used in the manufacture of the goods, and the denial of credit was unsustainable.

Ratio Decidendi: A job-worker manufacturing goods under Notification No. 214/86-CE is entitled to Cenvat credit on its own inputs used in such manufacture, and binding precedents on identical questions of law must be followed by lower authorities.

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