Job-work clearance of used capital goods remains covered by Rule 4(5)(a), barring credit reversal or duty demand.

Used capital goods sent to a job worker for further processing fall within Rule 4(5)(a) of the Cenvat Credit Rules, 2004, which permits such clearance without treating it as a dutiable removal, provided the job-work conditions are met. The Larger Bench view was applied to hold that the expression in the rule is not to be read narrowly so as to exclude used capital goods sent for testing, repair, reconditioning or similar processing. On that basis, no reversal of credit or demand under Rule 3(5)(a) was sustainable.

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Issues: Whether used capital goods removed to a job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 could be treated as clearance attracting reversal of credit or payment under Rule 3(5)(a) of the Cenvat Credit Rules, 2004.

Analysis: The removal of capital goods to a job worker for further processing was covered by Rule 4(5)(a), which permits such clearance without payment of duty when the goods are sent for job work and returned within the stipulated period. The Revenue did not show any basis to distinguish the binding Larger Bench view that the expression used in the rule cannot be read so narrowly as to exclude used capital goods sent for testing, repair, reconditioning or similar processing. The earlier precedent was held fully applicable, and no ground was made out to invoke Rule 3(5)(a) on the facts.

Conclusion: The clearance to the job worker was valid under Rule 4(5)(a), and no duty reversal or demand under Rule 3(5)(a) was sustainable. The appeal of the Revenue failed.

Ratio Decidendi: Capital goods sent to a job worker under Rule 4(5)(a) remain within the rule even when they are used goods, and a reading that renders the job-work facility ineffective or redundant is impermissible.

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