Cenvat credit for job-work manufacture remains admissible where the principal manufacturer bears duty liability on the finished goods.

Cenvat credit on inputs used by a job worker under Notification No. 214/86-C.E. was held admissible because the principal manufacturer remains legally liable to discharge excise duty on the job-work goods. On that footing, the finished goods cannot be treated as exempted goods, so denial of credit on the inputs used in their manufacture is unsustainable. The view was stated to be covered by a Larger Bench decision and followed in later decisions, with the revenue's challenge failing.

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Issues: Whether Cenvat credit on inputs used by a job worker in manufacture under Notification No. 214/86-C.E. is admissible when the finished goods are cleared without payment of duty to the supplier of raw material.

Analysis: The notification makes the principal manufacturer legally liable to discharge excise duty on the job-work goods. On that basis, the goods manufactured by the job worker cannot be treated as exempted goods. The denial of credit on inputs used in such manufacture is therefore unsustainable. The issue is covered by the Larger Bench decision relied upon in the record, and the same view has been consistently followed in the cited decisions.

Conclusion: Cenvat credit was admissible and the revenue's challenge failed.

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