Deemed credit unavailable for job-work fabrics under strict invoice and duty-paid conditions; penalty not justified.

Deemed credit under Notification No. 30/2000-C.E. is unavailable for processed fabrics returned from job workers where the goods moved under Notification No. 214/86-C.E. and the job workers operated under the compounded levy scheme, because the notification requires receipt directly from the manufacturer of inputs under an invoice showing payment of appropriate duty. Job-work clearances in that setting do not amount to duty-paid supplies for deemed credit purposes, and allowing credit would create a double benefit. On penalty, no separate basis for penal action was established, so penalty was not warranted.

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Issues: (i) Whether deemed credit under Notification No. 30/2000-C.E. dated 31.03.2000 was admissible on processed fabrics received back from job workers when the movements were under Notification No. 214/86-C.E. dated 25.03.1986 and the job workers were under the compounded levy scheme; (ii) whether penalty was warranted in the facts of the case.

Issue (i): Whether deemed credit under Notification No. 30/2000-C.E. dated 31.03.2000 was admissible on processed fabrics received back from job workers when the movements were under Notification No. 214/86-C.E. dated 25.03.1986 and the job workers were under the compounded levy scheme.

Analysis: The respondents had sent semi-finished goods for job work under the procedure prescribed by Notification No. 214/86-C.E. and received them back under the same challans. The processed fabrics were not received directly from the manufacturer of inputs under an invoice showing payment of appropriate duty, which was the condition prescribed in Notification No. 30/2000-C.E. The clearances by the job workers, in the circumstances of job work under Notification No. 214/86-C.E., could not be treated as duty paid for the purpose of deemed credit, and permitting such credit would amount to a double benefit.

Conclusion: Deemed credit was not admissible and the Revenue succeeds on this issue.

Issue (ii): Whether penalty was warranted in the facts of the case.

Analysis: The dispute turned on the interpretation of the relevant notifications and the eligibility to deemed credit, without any separate basis for penal action being established.

Conclusion: Penalty was not warranted and was set aside.

Final Conclusion: The departmental appeals were allowed, the order of the Commissioner (Appeals) was set aside, and the original authority's order denying deemed credit was restored, while the penalty was removed.

Ratio Decidendi: Deemed credit under Notification No. 30/2000-C.E. is unavailable unless the inputs are received directly under an invoice declaring payment of appropriate excise duty and the notification's conditions are strictly satisfied; job-work clearances under Notification No. 214/86-C.E. do not automatically qualify as duty paid for that purpose.

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