Cenvat credit on duty-paid job-worked assembly not treated as double credit when inputs return in final product.

Cenvat credit was not wrongly denied where inputs sent to a job worker under Rule 4(5)(a) were used in manufacture of a trolley sub-assembly and duty was paid on the full value of the final product, including those inputs. Taking credit again on the duty-paid assembly was not a second availment on the same inputs, because the credit related to the final product received after duty discharge. Any procedural departure from the ideal route under Rule 3(5) did not justify recovery. The demand for alleged double credit was therefore not sustainable.

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Issues: Whether Cenvat credit was wrongly denied on the ground that credit had been availed twice on vacuum interrupter tubes sent to a job worker and received back as part of trolley sub-assembly.

Analysis: The inputs were sent for job work under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 and were used by the job worker along with other components in the manufacture of trolley sub-assembly. Duty was discharged on the full value of the trolley sub-assembly, including the value of the inputs contained therein, and the respondent thereafter took credit on the duty-paid final product. The mere fact that the inputs had earlier been cleared to job work did not justify treating the subsequent credit on the duty-paid assembly as a second availment on the same inputs. Any procedural lapse in not following the ideal route under Rule 3(5) while removing inputs as such did not warrant recovery of credit when the goods returned as part of the duty-paid assembly.

Conclusion: The credit was correctly availed and the demand for alleged double credit was not sustainable.

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