CESTAT Chennai Allows CENVAT Credit to Job Worker Despite Invoices in Principal Manufacturer’s Name

March 30, 2026 : The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that a job worker is entitled to avail CENVAT credit on capital goods even where invoices are issued in the name of the principal manufacturer, provided the goods are received, accounted for, and used in the manufacturing process.

The ruling came in a batch of appeals filed by GlaxoSmithKline Consumer Healthcare Ltd. and Avlon Cosmetics Pvt. Ltd. (ACPL), challenging demands and penalties confirmed by the Department.

Background

The dispute arose from a job work arrangement under which ACPL undertook packing of products such as Horlicks and Boost for GlaxoSmithKline. Capital goods, including plant and machinery, were procured by Glaxo and installed at ACPL’s premises for use in manufacturing. The finished goods were cleared by ACPL on payment of duty, and ACPL received conversion charges.

During audit, the Department objected to ACPL availing CENVAT credit on capital goods on the ground that the invoices were issued in the name of Glaxo, which had capitalised the goods in its books. It was alleged that ACPL neither owned nor paid for the goods and thus violated Rule 9 of the CENVAT Credit Rules, 2004.

Tribunal’s Findings

The Tribunal noted that:

• The capital goods were delivered directly to ACPL’s premises.
• ACPL was clearly mentioned as the consignee in the invoices.
• Shipping documents and Bills of Entry reflected delivery to ACPL under Glaxo’s instructions.
• Glaxo had not availed any CENVAT credit on the same goods.

Interpreting Rule 9, the Bench emphasized that credit cannot be denied merely due to procedural irregularities in documentation if substantive conditions are satisfied. It reiterated that the key requirement is receipt, accounting, and use of goods in manufacturing.

The Tribunal also relied on CBEC Circular dated 12.09.1995, which clarifies that where goods are sent directly to a job worker and the job worker is shown as consignee, credit can be availed by the job worker.

Further, judicial precedent, including the decision in Uni Cast Pvt. Ltd., was cited to support the principle that job workers are eligible for credit where goods are used in manufacturing and duty is paid on final products.

Decision

Rejecting the Department’s position, the Tribunal held that the denial of credit was unsustainable and lacked statutory backing. It observed that the objection was based solely on the fact that invoices were issued in the name of the principal manufacturer, which is not determinative.

Accordingly, the Tribunal:

• Set aside the demand of CENVAT credit along with interest
• Quashed penalties imposed on both ACPL and Glaxo
• Allowed all appeals with consequential relief

Key Takeaway

The ruling reinforces a substance-over-form approach in CENVAT credit matters. Where capital goods are demonstrably received, recorded, and used in manufacturing by a job worker, credit cannot be denied merely because invoices are issued in the name of the principal manufacturer.

Case Title: GlaxoSmithKline Consumer Healthcare Ltd. & Avlon Cosmetics Pvt. Ltd. v. Commissioner of GST & Central Excise (Audit)
Case Nos.: Excise Appeal Nos. 41350 of 2017, 41351 of 2017 & 41699 of 2019
Coram: P. Dinesha (Judicial Member), Vasa Seshagiri Rao (Technical Member)
Decision Date: 30.03.2026