CENVAT credit can be used to pay duty on job-work waste and scrap without one-to-one input correlation.

Duty on waste and scrap generated during job work may be discharged by debiting the CENVAT credit account, even where the credit was taken on inputs used in the manufacturer's own production. No one-to-one correlation is required between the input credit availed and the scrap cleared, and prior Tribunal precedent supports this mode of payment. Acceptance of the same approach for a subsequent period also reinforced the position. On that basis, the demand and penalty were not sustainable, and consequential relief followed.

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Issues: Whether duty on waste and scrap generated during job work could be paid by debiting the CENVAT credit account.

Analysis: The dispute concerned clearance of waste and scrap arising in the course of job work undertaken on goods supplied by other manufacturers. The objection was that credit taken on inputs used in the appellant's own manufacture could not be utilised for duty on scrap generated from job-work goods. The Tribunal held that no one-to-one correlation was required between the input credit and the duty discharged on waste and scrap, and relied on prior Tribunal precedent supporting such utilisation. The fact that the payment had also been accepted for a subsequent period was taken as supporting the appellant's stand.

Conclusion: The appellant was entitled to discharge duty on the waste and scrap by utilising CENVAT credit, and the demand and penalty could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where waste and scrap arise during job work, duty may be discharged through CENVAT credit without requiring one-to-one correlation between the credit availed on inputs and the goods cleared as scrap.

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