CENVAT credit on job worker inputs used for intermediate products was allowed for manufacture of final dutiable goods.

Rule 3(1) of the CENVAT Credit Rules, 2004 allows credit on duty-paid inputs used in manufacture of intermediate products by a job worker operating under Notification No. 214/86-Central Excise, where those intermediate products are received by the manufacturer for use in making the final dutiable product. On the stated facts, inputs purchased by the job worker and invoiced to the manufacturer were used in producing intermediate goods for the manufacturer's final excisable product, so the credit was admissible. The denial of credit, interest, and penalty was therefore set aside, consistent with the Tribunal's earlier decision in the same assessee's case.

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Issues: Whether CENVAT credit is admissible on inputs purchased by a job worker and invoiced to the manufacturer, where those inputs are used in the manufacture of intermediate products for the manufacturer's final dutiable product.

Analysis: Rule 3(1) of the CENVAT Credit Rules, 2004 permits credit not only on inputs received in the factory of the manufacturer but also on duty paid inputs and input services used in the manufacture of intermediate products by a job worker availing the benefit of Notification No. 214/86-Central Excise dated 25.03.1986, when such intermediate products are received by the manufacturer for use in or in relation to manufacture of the final product. The inputs covered by the job worker's invoices were admittedly used in the manufacture of the appellant's final product, which suffered excise duty. The credit was also supported by the Tribunal's earlier decision on the same issue in the appellant's own case.

Conclusion: CENVAT credit was held admissible and the denial of credit, interest, and penalty was set aside.

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