2026 (3) TMI 1630 - AT - Central Excise

Cenvat credit in job-work arrangements remains admissible when capital goods are received, accounted for, and used in manufacture.

In a job-work arrangement, Cenvat credit on capital goods was stated to remain admissible even where the invoice named the job worker as consignee, ... CENVAT credit on capital goods - job worker as consignee - eligibility of credit on invoice not issued in claimant's name - consequential penalty CENVAT credit on capital goods - job worker as consignee - eligibility of credit on invoice not issued in claimant's name - Avlon Cosmetics Private Ltd. was entitled to avail CENVAT credit on capital goods though the invoices were raised in the name of Glaxo, where Avlon was shown as consignee and the goods were received and used in its factory. - HELD THAT: - The Tribunal held that the material requirements for availment of credit stood satisfied since the capital goods were duty paid, were received in the factory, and credit was taken on the basis of the invoices covered by Rule 9. Though the invoices were not issued in the name of the assessee, they specifically mentioned the assessee's name and address as consignee, the shipping address was that of the assessee, and even the Bill of Entry endorsement showed delivery to the assessee's premises under the instructions of Glaxo. It was also undisputed that Glaxo had not availed any credit on the same goods. On these facts, the objection that the document was ineligible merely because the invoice stood in the principal's name was held unsustainable; the Tribunal also found support from the Board circular and the decision in Uni Cast Pvt. Ltd. CCE Meerut [2015 (10) TMI 375 - ALLAHABAD HIGH COURT]. [Paras 9, 10, 11] The denial of CENVAT credit was set aside as the assessee had validly availed the credit on capital goods received and used by it as consignee. Consequential penalty - The penalties imposed on both appellants were not sustainable once the allegation of wrong availment of CENVAT credit failed. - HELD THAT: - Since the foundational charge of ineligible availment of credit was rejected, the Tribunal held that the penalties imposed on the manufacturer as well as the co-noticee lacked merit. No separate basis survived for sustaining penalty. [Paras 11] The penalties imposed under the impugned orders were set aside. Final Conclusion: The Tribunal held that the job worker was entitled to CENVAT credit on the capital goods since the invoices and import documents showed receipt at its premises as consignee and the principal had not taken credit. Consequently, the demand and the penalties against both appellants were set aside and the appeals were allowed. Issues: Whether the appellant was entitled to Cenvat credit on capital goods received at the job worker's premises under invoices showing the job worker as consignee, and whether the consequential demand and penalties were sustainable.Analysis: The invoices and shipping documents named the job worker as consignee and showed delivery at its premises under the principal manufacturer's instructions. The capital goods were received and used in manufacture, and the principal manufacturer had not availed credit on the same goods. Rule 9 of the Cenvat Credit Rules, 2004 permits credit on the basis of prescribed documents, and the defect alleged by the Revenue was not sufficient to deny credit when the goods were identifiable, received, and accounted for. The stated position was also supported by the Board's circular and judicial authority recognising credit entitlement in a job-work arrangement where the goods are received and used for manufacture.Conclusion: The credit was held to be admissible and the demand was not sustainable.Final Conclusion: The impugned orders were set aside and the appeals were allowed, with the penalties also falling along with the demand.Ratio Decidendi: In a job-work arrangement, Cenvat credit cannot be denied merely because the invoice names the job worker as consignee, if the goods are duly received, accounted for, and used in manufacture in accordance with the prescribed documentation.