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Issues: Whether Diethyl Phthalate cleared for job work under Rule 4(5)(a) of the Cenvat Credit Rules, 2002 could be treated as exempt from duty as input or intermediate goods, and whether duty demand on such clearance was sustainable.
Analysis: The clearance was made for job work and the processed goods were received back and used in the manufacture of the final product. Even if Diethyl Phthalate was the appellant's finished product at an earlier stage, it functioned as an input or intermediate good for the subsequent manufacturing process. Goods used in the manufacture of the final product are covered by the job work provision, and the fact that the final product was ultimately cleared on payment of excise duty supported the appellant's case. The demand based on the premise that the goods were final product and therefore could not be removed under the rule was rejected.
Conclusion: The clearance was valid under Rule 4(5)(a) of the Cenvat Credit Rules, 2002 and the duty demand on Diethyl Phthalate was unsustainable; the appeal was allowed.
Ratio Decidendi: Goods removed for job work and used in the manufacture of the final product are to be treated as inputs or intermediate goods for the purpose of Rule 4(5)(a) of the Cenvat Credit Rules, 2002, and no separate duty demand can survive where the final product is cleared on payment of duty.
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