Cenvat credit on common inputs can be used for dutiable output without one-to-one input correlation, even with exempted clearances.

Cenvat credit on common inputs used in manufacturing dutiable final products could be utilised for duty payment without one-to-one correlation between each input and a specific final product. The record showed that the assessee used the common inputs in a merged manufacturing set-up producing both dutiable and exempted goods, but the credit scheme did not require segregation of every input against a particular output. Credit could not be denied merely because exempted clearances also existed, so the Revenue's objection to utilisation of the credit failed.

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Issues: Whether Cenvat credit taken on common inputs could be utilised towards payment of duty on the dutiable final products, without requiring one-to-one correlation between inputs and final products.

Analysis: The Revenue did not dispute the merger of the two units or the fact that, after merger, the assessee was manufacturing both dutiable and non-excisable/exempted products. The credit in question related to common inputs used in the manufacture of the dutiable goods. The applicable credit scheme permits utilisation of credit for payment of duty on any final product, and the record did not support a requirement that each input must be linked to a particular final product. In these circumstances, the credit earned on common inputs could not be denied merely because the assessee also cleared exempted goods.

Conclusion: The assessee was entitled to utilise the Cenvat credit on common inputs for payment of duty on the dutiable final products; the Revenue's objection failed.

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