Input credit for job-work clearances upheld where intermediate goods were duty-paid under the normal excise procedure

Input credit could not be denied merely because a job worker cleared intermediate goods on payment of duty under the normal procedure rather than returning them without duty payment. The Tribunal treated the issue as settled by earlier decisions and held that such clearance did not create impermissible double duty under the excise scheme. It also accepted that a small scale unit acting as a job worker could claim the small scale exemption and return processed goods on payment of duty, and it could not be forced to follow Notification No. 214/86-C.E. when the statutory conditions allowed the alternative course. The Revenue's objection failed and credit was upheld.

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Issues: Whether the Revenue could deny the respondent-manufacturer the benefit of input credit on the ground that the job worker cleared intermediate goods on payment of duty under the normal procedure instead of returning them without duty payment, and whether such clearance resulted in impermissible double under the excise scheme.

Analysis: The Tribunal noted that the point was already settled by earlier decisions. It was held that input credit was not deniable merely because the job worker paid duty on the intermediate components under the normal procedure rather than returning them without payment of duty. The Tribunal further relied on the view that a small scale unit acting as a job worker could avail the small scale exemption and return the processed goods on payment of duty, and that it could not be compelled to adopt the alternative procedure under Notification No. 214/86-C.E. when the statutory conditions permitted the other course.

Conclusion: The Revenue's objection failed, and the order allowing credit was upheld against the Revenue.

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