Continuous manufacturing chain preserves CENVAT credit where prior reversal and job work precede testing, packing, and export clearance.

Where the factual sequence shows a continuous manufacturing chain through job work, prior reversal of credit, and later testing and packing before export, CENVAT credit remains admissible. The assessee had received inputs, manufactured castings, routed them through machining and other job workers, and cleared the final goods after duty-paid movements without claiming credit twice. The court treated the later testing and packing as part of the same manufacturing process and upheld the Tribunal's view that entitlement to credit was not broken by the final export stage. The Revenue's challenge therefore failed and the assessee's credit claim was sustained.

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Issues: Whether CENVAT credit was admissible where the assessee had undertaken manufacturing processes through job workers, reversed earlier credit, and cleared the final goods for export after testing and packing, despite the Revenue's contention that the later stage involved only testing and packing and that manufacture was not established.

Analysis: The assessee had not merely subjected the goods to testing and packing. The factual chain showed receipt of inputs, manufacture of castings, sending them for machining, return through another job worker after duty payment, and subsequent testing and packing before export. The earlier credit had been reversed, so the assessee was not claiming credit twice. On those facts, the later activities formed part of a continuous series of manufacturing steps, and the Tribunal was justified in treating the goods as part of the manufacturing process and allowing credit.

Conclusion: The claim to CENVAT credit was held to be admissible and the Revenue's challenge failed.

Final Conclusion: The appeals were rejected and the assessee's entitlement to CENVAT credit was sustained.

Ratio Decidendi: Where the factual sequence shows a continuous manufacturing chain with prior reversal of credit, subsequent testing and packing do not break entitlement to CENVAT credit merely because the final export clearance occurs after job work and duty-paid movements.

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