CENVAT credit on job-worker used capital goods is admissible where goods are received in the factory and meet the definition.

CENVAT credit on capital goods used by job workers for erection and commissioning of plant and machinery cannot be denied merely because the manufacturer did not directly purchase or itself use the goods. The decisive requirement under Rule 2(b) of the CENVAT Credit Rules, 2002 was receipt of the goods in the factory and their qualification as capital goods; no additional statutory condition required the manufacturer to perform the fabrication or erection personally. Where the goods satisfied the definition and the notice did not dispute that character, the Revenue's objection that job workers were the real manufacturers did not defeat credit. The denial was held unsustainable and the credit admissible.

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Issues: Whether CENVAT credit on goods used by job workers for erection and commissioning of plant and machinery could be denied to the manufacturer merely because the manufacturer did not itself purchase or directly use the goods.

Analysis: Rule 2(b) of the CENVAT Credit Rules, 2002 defined capital goods and permitted credit when such goods were received in the factory of the manufacturer of the final products. The decisive requirement was receipt of goods within the factory and their answer to the definition of capital goods. There was no statutory condition that the manufacturer must itself purchase the goods or personally undertake the fabrication, assembly, or erection work. The Revenue's premise that the job workers were the real manufacturers did not defeat credit where the goods were covered by the relevant definition and the show cause notice itself had not disputed that character.

Conclusion: The denial of CENVAT credit was unsustainable and the credit was admissible to the assessee.

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