Fuel used in mixed manufacture: credit reversal for non-maintenance of separate accounts was not warranted.

LSHS and furnace oil used in manufacturing both dutiable and exempted goods were treated as fuel outside the input category covered by the credit rule. On that basis, reversal of Modvat/Cenvat credit for non-maintenance of separate accounts was not warranted, and the insistence on separate accounting under the rule analogous to Rule 6 of the CENVAT Credit Rules, 2001 did not apply. The assessee was therefore not liable to reverse the credit, and the Revenue's appeal failed.

---

---

Issues: Whether Modvat/Cenvat credit taken on LSHS/furnace oil used in the manufacture of both dutiable and exempted goods was required to be reversed for want of separate accounts.

Analysis: The fuel was treated as outside the purview of inputs covered by the relevant rule. The provision was considered analogous to Rule 6 of the CENVAT Credit Rules, 2001, under which credit reversal or insistence on maintenance of separate accounts for fuel used as input could not be required.

Conclusion: The assessee was not liable to reverse the credit on the fuel, and the Revenue's appeal failed.

Ratio Decidendi: Where fuel is excluded from the category of inputs under the credit rule, denial or reversal of credit for non-maintenance of separate accounts is not warranted.

---