Concessional-rate clearances for specified end use are not exempted goods for Rule 6(3) purposes, negating separate-account and value-based demand.

Goods cleared under a concessional-rate notification for specified end use are not to be treated as exempted goods or goods chargeable to nil duty for Rule 6(3) of the Cenvat Credit Rules, 2004. On that reasoning, the obligation to maintain separate accounts and pay 10% of the value did not arise for spent sulphuric acid cleared under Notification No. 04/2006-CE, and the demand was held unsustainable. Authorities dealing with by-products and Chapter X procedure were found inapplicable because the dispute turned on the character of the notified clearance.

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Issues: Whether the respondent was liable to maintain separate accounts and pay 10% of the value under Rule 6(3) of the Cenvat Credit Rules, 2004 in respect of spent sulphuric acid cleared under Notification No. 04/2006-CE for specific end use.

Analysis: The clearances were made under a concessional-rate notification for specified end use. The goods could not be treated as exempted goods or as goods chargeable to nil rate of duty merely because they were cleared without payment of duty in the prescribed procedure. The cited authorities on by-products and Chapter X procedure were held to be inapplicable to the present controversy, which turned on the character of the clearance under the notification and not on general dutiability of by-products. Following the cited Tribunal decision relied upon by the Commissioner (Appeals), the demand under Rule 6(3) was not sustainable.

Conclusion: The liability to maintain separate accounts and to pay 10% of value under Rule 6(3) was negatived, and the Revenue's appeal was rejected.

Ratio Decidendi: Goods cleared under a concessional-rate notification for specified end use are not to be treated as exempted goods or goods chargeable to nil duty for the purpose of Rule 6(3) of the Cenvat Credit Rules, 2004.

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