Job-work treatment for transfers between separate manufacturing units is available when CENVAT procedure is followed and duty is paid on clearance.

Removal of inputs and processed goods between separate units of the same manufacturer under Annexure-II challans can qualify as movement for job work under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 when the prescribed CENVAT procedure is followed. The text states that separate registered units are to be treated independently for excise purposes, so the job-work route cannot be denied merely because the units belong to the same legal entity. Where the finished goods are cleared on payment of excise duty from the receiving unit, demand and penalty are not sustainable.

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Issues: Whether removal of inputs and processed goods between different units of the same manufacturer under Annexure-II challans could be treated as movement to a job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, and whether duty and penalty were sustainable when the finished goods had already suffered excise duty at the clearing unit.

Analysis: The goods were moved under challans in accordance with the prescribed CENVAT procedure, and the finished products were cleared on payment of duty from the receiving unit. The reasoning that one unit of the same legal entity cannot function as a job worker was not accepted. The earlier authority relied upon by the adjudicating authority was found inapposite and later overruled, while the decision in a similar case recognised that separate registered units of the same manufacturer are to be treated independently for excise purposes and that the benefit of the job-work route cannot be denied merely because the units belong to the same legal entity.

Conclusion: The demand and penalty were unsustainable, and the relief was in favour of the appellants.

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