Job-work clearance of polyester yarn under Cenvat credit rules remained valid despite a notification-based exclusion, making confiscation and penalty unsustainable.

Removal of polyester texturised yarn from one unit to another for further processing under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 remained permissible because the general job-work clearance provision was not amended to exclude polyester twisted yarn. The fact that Notification No. 26/2004 amended Notification No. 214/86-C.E. to exclude polyester filament yarn from the job-work facility did not, by itself, make clearances under Rule 4(5)(a) irregular. On that basis, confiscation and penalty based on the alleged irregular removal were held unsustainable, and the clearance was treated as valid.

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Issues: Whether removal of polyester texturised yarn under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 for job work could be treated as irregular after the job work facility was excluded for polyester filament yarn by Notification No. 26/2004 amending Notification No. 214/86-C.E.

Analysis: The goods were permitted to be cleared by the Amli unit to the Piparia unit for undertaking further processes. The general provision in Rule 4(5)(a) permitting such clearances had not been amended to exclude polyester twisted yarn. The exclusion introduced by the notification did not by itself make the clearance under the rule irregular. On that basis, the confiscation and penalty set aside in appeal were held to be unsustainable.

Conclusion: The clearance under Rule 4(5)(a) was valid, and the confiscation and penalties were not justified.

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