CENVAT credit reversal on job-work inputs rejected where scrap was duly accounted for and duty-paid by the job worker.

CENVAT credit reversal was not required from the principal manufacturer where the job worker had accounted for scrap generated during processing and paid central excise duty on it. The Revenue failed to dislodge the job worker's quantification of scrap, and there was no evidence that the inputs sent for job work were incorrectly accounted for or not received back. A general assertion that there was no loss in wire drawing was insufficient, especially where cutting, trimming, and insulation could cause loss. Earlier Tribunal decisions relied on below were not effectively challenged, so the demand was held unsustainable.

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Issues: Whether the principal manufacturer was required to reverse CENVAT credit on inputs sent for job work where the job worker accounted for and paid duty on scrap generated in the process.

Analysis: The appeal turned on the Revenue's challenge to the quantification of scrap and the contention that the entire quantity of inputs sent for job work was not received back. There was no evidence to show that the quantification made by the job worker was incorrect. The job worker had accounted for the scrap and discharged central excise duty thereon. The reliance placed on a general statement that there was no loss in drawing of wire was not sufficient to displace the finding that a mechanical process would involve loss in cutting and trimming, while insulation could also affect weight. The order below had also relied on earlier Tribunal decisions, and there was no effective challenge to that reliance.

Conclusion: The demand for reversal of CENVAT credit was not sustainable against the principal manufacturer, and the Revenue's appeal failed.

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