Cenvat credit on imported inputs sent for job work cannot be denied where no transfer or sale occurs under the notification.

Cenvat credit of countervailing duty on imported inputs was held not deniable merely because the importer sent the goods to a job worker under the Target Plus scheme. The inputs were imported by the manufacturer, received and used in manufacturing by the job worker, and then returned for export or home clearance; this arrangement was treated as conversion for manufacture, not a transfer or sale. Since condition No. 3 of Notification No. 73/2006-Cus. was not violated on those facts, denial of credit was found unsustainable and the issue was decided in favour of the assessee.

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Issues: Whether Cenvat credit of countervailing duty paid on imported inputs sent by the importer to a job worker for manufacture of final products could be denied on the ground that the goods were imported under the target plus scheme and condition No. 3 of Notification No. 73/2006-Cus. was not complied with.

Analysis: The inputs were admittedly imported by the manufacturer and dispatched to the appellant for job work, were received and consumed in the manufacture of final products, and were thereafter returned to the manufacturer for export or home clearance. The condition in the notification prohibiting transfer or sale was found not to be violated, because the goods were sent for conversion to a job worker and were not transferred or sold to the appellant. The notification grants the benefit to the importer, but it does not provide that Cenvat credit must be denied merely because the imported inputs are sent for manufacturing through a job worker.

Conclusion: Denial of Cenvat credit was held to be unsustainable and the issue was decided in favour of the assessee.

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