Rule 6 CENVAT credit applies to partly exempt clearances when separate accounts are not maintained.

Goods cleared partly on payment of duty and partly under a conditional exemption remained excisable and dutiable for Rule 6 of the CENVAT Credit Rules, 2004. The tribunal held that partial exemption for specified clearances did not change the character of the goods into non-dutiable or fully exempt goods, so the common-input credit restriction continued to apply. Because the manufacturer did not maintain separate accounts for dutiable and exempt clearances, the demand based on Rule 6 was sustained. Prior decisions under Rule 57CC of the Central Excise Rules, 1944 were treated as persuasive because the provisions were considered pari materia.

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Issues: Whether Rule 6 of the CENVAT Credit Rules, 2004 applied where the same goods were cleared both on payment of duty and under exemption under the notification, and whether an amount equal to 10% of the price of the exempted clearances was payable for failure to maintain separate accounts.

Analysis: The goods in question remained excisable and dutiable. The fact that duty was not attracted for clearances made to certain categories of customers under the exemption notification did not convert the goods into non-dutiable or exempt goods for all purposes. The rule governing common inputs for dutiable and exempted products was held applicable. The earlier decisions under Rule 57CC of the Central Excise Rules, 1944 were treated as guiding because Rule 6 of the CENVAT Credit Rules, 2004 was considered pari materia with that provision.

Conclusion: Rule 6 applied, and the demand based on non-maintenance of separate accounts was sustained. The appeal was not allowed.

Final Conclusion: The order against the assessee was maintained on the footing that partial exemption from duty on certain clearances did not alter the excisable character of the goods or exclude the operation of the common-credit reversal provision.

Ratio Decidendi: Goods cleared under a conditional exemption remain excisable and dutiable for the purposes of Rule 6 where the manufacturer clears the same goods both as duty-paid and exempted goods without maintaining separate accounts.

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