Job-work credit cannot be denied solely for delayed return when prescribed reversal and reuse in manufacture are established.

CENVAT/Modvat credit is not to be denied merely because goods sent to a job worker are received back after the stipulated 180-day period, where the prescribed job-work procedure was followed, the requisite reversal was made on removal, and the goods were ultimately returned and used in manufacture. The Tribunal referred to the departmental clarification dated 3-4-2001, which indicates that credit remains available on receipt of the goods back, with debit required only for the credit attributable to goods not received within the period. On these facts, delayed return alone was insufficient to disallow credit.

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Issues: Whether CENVAT/Modvat credit could be denied merely because goods sent to a job worker were received back after the stipulated period of 180 days, when the assessee had reversed the requisite credit at the time of removal and the goods were ultimately received back and used in manufacture.

Analysis: The Tribunal noted that the assessee had followed the prescribed job-work procedure under Rule 57F(4) of the Central Excise Rules, 1944 and had reversed 10% of the Modvat credit when sending the goods for processing. The only objection was the delayed return of the processed goods beyond 180 days. The Tribunal relied on the departmental clarification dated 3-4-2001, which stated that the manufacturer remains entitled to take credit when the goods are received back from the job worker, and that the debit obligation arises only in respect of the credit attributable to goods not received back within 180 days. As the receipt of the goods back, their processing, and their use in the final product were undisputed, there was no basis to deny the credit.

Conclusion: The credit could not be denied on the ground of delayed return alone, and the Revenue's challenge failed.

Ratio Decidendi: Credit cannot be denied solely because inputs or goods sent to a job worker are received back after the stipulated period, where the prescribed reversal procedure was followed and the goods were ultimately received back for use in manufacture.

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