Job Worker Entitled To CENVAT Credit On Capital Goods Despite Invoice Name Mismatch: CESTAT Chennai

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 30 March, held that a job worker can avail CENVAT credit on capital goods even if invoices are not issued in its name, provided the goods are received, accounted for, and used in the manufacturing process.

A Bench comprising Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao held:

“In view of the above discussions, we are of the view that the allegation of the Revenue that ACPL had availed ineligible CENVAT credit is clearly unsustainable and is also not supported by any statutory provision and hence, the demand in the impugned orders cannot sustain.”

The case arose from an arrangement between GlaxoSmithKline Consumer Healthcare Ltd. and Avlon Cosmetics Pvt. Ltd. (ACPL). ACPL undertook job work of packing products such as Horlicks and Boost. Glaxo supplied capital goods, which were installed at ACPL's premises for manufacturing activities.

During audit, the Department alleged that ACPL wrongly availed CENVAT credit since invoices were issued in Glaxo's name, and ACPL neither owned nor paid for the goods, violating the CENVAT Credit Rules, 2004. Consequently, credit along with interest and penalties was confirmed against both entities.

The Tribunal examined the records and noted that ACPL was clearly mentioned as the consignee, and the goods were delivered to and used at its premises. Glaxo had not availed any credit on these goods. Relying on CBEC Circulars and judicial precedents, the Tribunal held that a job worker can claim credit when goods are received and used in manufacturing.

The Bench observed that Rule 9 of the CENVAT Credit Rules requires only that the goods be received and accounted for, and not necessarily that the invoice be in the claimant's name, especially when consignee details are clearly reflected.

Accordingly, the Tribunal set aside the impugned orders and allowed the appeals with consequential benefits.

Appearance for the Appellants: Shri Raghavan Ramabadran, Advocate

Appearance for the Respondent (Revenue): Shri M. Selvakumar, Authorized Representative