Tribunal allows cenvat credit for imported goods used in job working for pharmaceutical company

The Tribunal overturned the denial of cenvat credit to the appellant, a job worker for a pharmaceutical company, for imported goods used in job working under the target plus scheme. The lower authorities had denied credit citing non-fulfillment of scheme conditions and non-registration of the appellant as a supporting manufacturer. However, the Tribunal found that the denial was incorrect as the imported goods were used for manufacturing and export by the company, and the scheme did not prohibit credit when goods were sent for processing by job workers. The impugned order was set aside, and the appeal was allowed.

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Issues:
Denial of cenvat credit on imported goods for job working under target plus scheme.

Analysis:
The appeal addressed the denial of cenvat credit to the appellant for the countervailing duty (CVD) paid on imported goods used for job working. The appellant, a job worker of a pharmaceutical company, received imported materials from the company under two sets of Bills of Entry. The first set indicated full customs duty discharge by the company, enabling the appellant to avail CVD credit. The second set, imported under the target plus scheme, faced objections for credit availing as the appellant's name was not on the Bill of Entry. The lower authorities upheld the denial, leading to a penalty. The first appellate authority allowed credit for the first set but denied it for the second, citing non-fulfillment of scheme conditions.

The departmental representative highlighted non-registration of the appellant as a supporting manufacturer under the scheme, deeming the credit ineligible. The Chartered Accountant argued that the appellant's role as a job worker justified credit availing, disputing misinterpretation of the scheme's conditions. The Tribunal found misdirection in the lower authorities' decisions, emphasizing the appellant's job working role for the pharmaceutical company. The denial of credit to a manufacturer of final products seemed incorrect, especially when the imported inputs were used for manufacturing and export by the company.

The Tribunal clarified that the scheme's conditions did not mandate denial of credit when imported goods were sent for manufacturing by the importer to their job workers, as in the current scenario. The condition regarding non-transfer or sale of goods did not apply as the imported inputs were used for conversion by the appellant as a job worker, not sold or transferred. Consequently, the denial of cenvat credit to the appellant was deemed incorrect, leading to the setting aside of the impugned order and allowing the appeal.

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