Rule 6 of the Cenvat Credit Rules: prima facie stay granted on separate accounts and practical compliance dispute.

Rule 6 of the Cenvat Credit Rules, 2004 was considered in relation to whether an assessee maintaining separate accounts under sub-rule (2) could still seek the benefit contemplated by sub-rule (3)(a) where strict compliance was practically difficult. The Tribunal noted that the issue required consideration in light of the Larger Bench ruling in Nicholas Piramel (I) Ltd. and that the demand and penalty involved were substantial. On that basis, it found a prima facie case for interim protection pending final hearing and directed early listing of the appeal.

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Issues: Whether the appellant made out a prima facie case for stay of the impugned demand and penalty order pending disposal of the appeal.

Analysis: The appeal raised a substantial question on the operation of Rule 6 of the Cenvat Credit Rules, 2004, namely whether an assessee maintaining separate accounts under sub-rule (2) could, in the event of practical difficulty in strict compliance, avail the benefit contemplated by sub-rule (3)(a). The Tribunal noted that the question required consideration in light of the Larger Bench decision in Nicholas Piramel (I) Ltd. and observed that the amount involved was substantial. In these circumstances, the matter warranted interim protection pending final hearing.

Conclusion: A prima facie case for stay was made out and the stay application was disposed of by granting interim protection and directing early listing of the appeal.

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