Deemed Modvat credit on job-work aluminium scrap denied where inputs were not acquired or accounted for by the manufacturer.

Deemed Modvat credit on aluminium scrap used by a job worker for fan castings was held inadmissible because the manufacturer had not acquired the inputs. The invoice only split scrap value and job charges, while the scrap was procured and consumed by the job worker, not purchased or accounted for by the appellants. As the waste and scrap generated were also not returned and there was no evidence of purchase on the appellants' behalf, recovery under Rule 57-I was upheld.

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Issues: Whether deemed Modvat credit was admissible on aluminium scrap used by a job worker in making fan castings for the appellants.

Analysis: Deemed credit under Rule 57G is available only where the manufacturer can be said to have acquired the inputs. The invoice relied upon by the appellants only showed a split-up between the scrap value and job charges, but the materials were procured and used by the job worker in manufacturing castings. The scrap was neither purchased nor accounted for by the appellants, and the waste and scrap generated in manufacture were not returned to them. There was no evidence that the job worker had purchased the scrap on behalf of the appellants.

Conclusion: Deemed Modvat credit on the aluminium scrap was not admissible, and recovery under Rule 57-I was upheld against the appellants.

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