Job-worker entitled to CENVAT credit on imported materials with principal's declaration on bills of entry

CESTAT Ahmedabad dismissed Revenue's appeal regarding job-worker's entitlement to CENVAT credit. The appellant job-worker had availed credit based on bills of entry in the principal's name that contained declarations allowing the appellant to claim the credit. The tribunal relied on precedent from CGST vs Ravi Pharmaceuticals Private Limited, which established that bills of entry constitute duty-paying documents when endorsed in the job-worker's name for material usage. Since imported raw materials were supplied to the job-worker with proper declarations from the principal on the bills of entry, the CENVAT credit was rightfully allowed. The identical factual situation warranted the same legal outcome, confirming the job-worker's legitimate entitlement to the credit.

---

---

ISSUES:

• Whether a job worker is entitled to avail Cenvat credit on the strength of Bills of Entry in the name of the principal with a declaration allowing the job worker to take credit.
• Whether endorsement of Bills of Entry in the name of the job worker is mandatory for availing Cenvat credit under Rule 9 of the Cenvat Credit Rules, 2004.
• Whether procedural or technical lapses in documentation can justify disallowance of Cenvat credit and imposition of penalty under Section 11AC of the Central Excise Act, 1944.

RULINGS / HOLDINGS:

• The Court held that a job worker is entitled to avail Cenvat credit on imported inputs received under Bills of Entry in the name of the principal, accompanied by a declaration permitting the job worker to take credit, as the goods are received and used in manufacture of dutiable goods.
• The Court found that Rule 9 of the Cenvat Credit Rules, 2004 does not mandate endorsement of Bills of Entry in the name of the job worker, especially since endorsement by Customs Officer has been discontinued; a separate certificate or declaration issued by the principal is to be considered part of the Bill of Entry for the purpose of availing credit.
• The Court ruled that no Cenvat credit can be disallowed nor penalty imposed merely on account of technical or procedural lapses in documentation, provided the imported goods are duty paid, received, and used in manufacture of excisable goods.

RATIONALE:

• The Court applied Rule 9 of the Cenvat Credit Rules, 2004, which lists documents on the basis of which Cenvat credit can be availed, including Bills of Entry, and requires prescribed particulars to be contained therein.
• The Court relied on judicial precedents including a High Court judgment holding that a separate certificate/declaration issued instead of endorsement of Bill of Entry is to be considered part of the Bill of Entry for credit purposes, and that credit cannot be denied if duty has been paid and goods have been used in manufacture.
• Subsequent Supreme Court dismissal of departmental appeals against such judgments was noted, indicating acceptance of this legal position by the department.
• Other authoritative decisions were cited confirming that Cenvat credit is admissible even if Bills of Entry are not in the name of the manufacturer but goods are received and used in manufacture.
• The Court emphasized that procedural compliance is important but cannot override the substantive fact that imported inputs were duty paid and used in manufacture, thus rejecting attempts to deny credit or impose penalties solely on technical grounds.

---