Job-work treatment for captive unit processing cannot be denied when statutory removal, processing, and return conditions are satisfied.

Duty-paid inputs transferred between two registered units of the same manufacturer may still qualify for job-work treatment under Notification No. 214/86-C.E. and the corresponding CENVAT framework where the statutory conditions for removal, processing, and return are satisfied. The fact that the processor is another unit of the same legal entity, rather than an outside party, does not by itself defeat the benefit. Where the inputs were taken on credit, moved with departmental permission, processed, returned as finished goods, and duty was discharged on the final products, denial of the exemption was unsustainable and the related demand, interest, and penalties could not survive.

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Issues: Whether inputs received duty-paid by one unit of a company and sent to another unit of the same company for processing could be cleared under the job-work route so as to retain the benefit of Notification No. 214/86-C.E. and the corresponding CENVAT provisions.

Analysis: The units were different registered units of the same legal entity, but for excise purposes each unit had to be treated separately. The record showed that duty-paid inputs were received, taken on credit, and moved with departmental permission for processing under the relevant job-work provisions, and the processed goods were brought back and duty was discharged on the final products. The absence of a separate job-charge arrangement did not furnish a legal basis to deny the benefit, because the decisive factor was the nature of the processing and return of goods, not whether the processor was an outside entity or another unit of the same manufacturer.

Conclusion: The denial of the notification benefit was unsustainable, and the demand, interest, and penalties could not stand.

Final Conclusion: The substantive dispute was resolved in favour of the assessee, and the Commissioner's order was set aside.

Ratio Decidendi: For excise purposes, processing of duty-paid inputs by another registered unit of the same manufacturer cannot be denied job-work treatment merely because both units belong to the same legal entity, where the statutory conditions for removal, processing, and return are otherwise satisfied.

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