Job-work clearances do not bar CENVAT credit on capital goods when duty is ultimately paid on the final product.

Capital goods used in job-work production were not denied CENVAT credit merely because the intermediate goods were cleared without payment of duty at the job-worker stage, where duty was ultimately discharged on the final product by the principal manufacturer. The Tribunal applied its settled line of decisions on job-work clearances and extended that reasoning to capital goods under Rule 6(4) of the Cenvat Credit Rules, 2001, finding no basis to depart from the existing view. The impugned order was set aside and credit eligibility was upheld in favour of the assessees.

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Issues: Whether capital goods used in job-work manufacture and cleared without payment of duty at the job-worker stage were eligible for CENVAT credit under Rule 6(4) of the Cenvat Credit Rules, 2001.

Analysis: The Tribunal noted that its earlier decisions had consistently held that goods manufactured on job-work basis and cleared without duty at the intermediate stage do not lose eligibility for credit merely because duty is paid at the principal manufacturer's end. The Tribunal treated the settled line of decisions as covering capital goods as well and found no reason to depart from that view.

Conclusion: The capital goods were held eligible for CENVAT credit. The impugned order was set aside and the appeals were allowed in favour of the assessees.

Final Conclusion: The dispute on credit entitlement was against the Revenue, with the Tribunal accepting that job-work clearance at an intermediate stage did not bar credit where duty was ultimately discharged on the final product.

Ratio Decidendi: Capital goods used in job-work production are not denied CENVAT credit merely because the intermediate goods are cleared without duty, where duty is ultimately paid on the final product by the principal manufacturer.

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