Cenvat credit on factory shift remains available where inputs are accounted for and job work does not defeat eligibility.

Cenvat credit could be transferred and retained when a manufacturer shifted its factory to another site, provided the stock of inputs and capital goods on which credit was taken was duly accounted for. The intimation of the factory shift and stock position supported entitlement, and there was no material to show that the inputs were not used in manufacture. Sending inputs to job workers did not, by itself, make the credit ineligible. The absence of manufacturing activity at the original premises was not a valid basis to deny credit where the assessee remained registered and had informed the department of the shift. Denial of credit was therefore unsustainable.

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Issues: Whether Cenvat credit could be transferred and retained when the manufacturer shifted the factory to another site and sent inputs to job workers, and whether absence of manufacturing activity at the original premises justified denial of credit.

Analysis: Rule 8 of the Cenvat Credit Rules, 2002 permits transfer of unutilised Cenvat credit when a manufacturer shifts the factory to another site, subject to accounting for the stock of inputs and capital goods on which credit has been taken. The record showed that the department had been informed about the shifting of the factory and the stock position, and there was no material to show that the inputs were not used in the manufacture of finished goods. The fact that inputs were sent to job workers for further manufacture did not, by itself, make the credit ineligible. Non-availability of manufacturing activity at the original premises was not a valid ground to deny Cenvat credit where the assessee was otherwise registered and the factory shift was intimated.

Conclusion: The assessee was entitled to transfer and retain the Cenvat credit, and denial of credit on the stated ground was unsustainable.

Ratio Decidendi: Where a manufacturer shifts its factory and duly accounts for inputs and capital goods, Cenvat credit cannot be denied merely because manufacturing is carried out through job work or not at the original premises.

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