Revenue appeals duty payment for lack of separate accounts, but Tribunal decisions and Supreme Court ruling support company's position.

The case involved an appeal by the Revenue against a company for not maintaining separate inventory of inputs used for manufacturing certain products and not paying duty as required. The Revenue argued for duty payment due to the lack of separate accounts, while the company relied on Tribunal decisions and a Supreme Court ruling stating that reversal of credit at clearance exempts duty payment. The Member (Technical) upheld the company's position, citing the Supreme Court ruling and Tribunal decisions, rejecting the Revenue's appeal and supporting the original order.

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Issues involved: Interpretation of Rule 6(2) and 6(3) of Cenvat Credit Rules, 2004 regarding maintenance of separate accounts for inputs used in exempted and dutiable products, and the requirement to pay duty if separate accounts are not maintained.

Summary:
The case involved an appeal by the Revenue against M/s. Mahindra & Mahindra Ltd. for not maintaining separate inventory of inputs used for manufacturing Hydraulic Vary Touch Units (VTUs) and not paying duty as required under Rule 6(3) of Cenvat Credit Rules, 2004. The Revenue contended that failure to maintain separate accounts necessitated payment of duty at 10%. The respondents argued that as per Tribunal decisions and Supreme Court ruling, reversal of credit at the time of clearance exempts the duty payment requirement under Rule 6(3).

The Revenue relied on Tribunal decisions emphasizing the obligation to pay duty if separate accounts are not maintained, while the respondents cited Tribunal decisions and a Supreme Court ruling to support their position that reversal of credit at the time of clearance eliminates the duty payment requirement under Rule 6(3).

The Member (Technical) noted that the issue was settled by the Supreme Court ruling, which stated that reversal of credit at the time of clearance nullifies the need to pay duty, as supported by Tribunal decisions in similar cases. Consequently, the appeal by the Revenue was rejected, and the Commissioner (Appeals) order was upheld, along with the disposal of Cross Objection in support of Order-in-Appeal.

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