Common-input Cenvat credit dispute under Rule 6(1): demand and penalty were not sustained on the Tribunal's earlier identical view.

Common input used for both dutiable and exempted final products did not justify the demand of an amount calculated at 8%/10% of the exempted goods' price, with penalty, merely for not maintaining separate accounts under Rule 6(1) of the Cenvat Credit Rules, 2004. The Tribunal followed an earlier identical decision and noted that the authorities cited by the Revenue did not address the precise entitlement and consequence under the Cenvat Credit Rules where inputs were used as fuel. On that basis, it held that the impugned demand could not be sustained and the penalty also failed.

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Issues: Whether demand of an amount calculated at 8%/10% of the price of exempted goods, along with penalty, could be sustained on the ground that the assessee used a common input for manufacture of both dutiable and exempted final products without maintaining separate accounts as required under Rule 6(1) of the Cenvat Credit Rules, 2004.

Analysis: The Tribunal treated the dispute as an identical issue already decided in an earlier order. It noted that the earlier decision had considered the rival contentions and had held that the authorities relied upon by the Revenue did not deal with the precise question of entitlement and consequence under the Cenvat Credit Rules in respect of inputs used as fuel. Following that view, the Tribunal found no basis to sustain the impugned demand merely for non-maintenance of separate accounts in the manner alleged.

Conclusion: The demand and penalty were not sustainable, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Where the dispute on common-input use for dutiable and exempted goods is already covered by an identical binding or followed decision, the demand cannot be sustained merely on the basis asserted by the Revenue under Rule 6(1) of the Cenvat Credit Rules, 2004.

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