Reversal of Cenvat credit for exempt clearances is sufficient compliance; no further 8% demand is warranted.

Reversal of Cenvat credit attributable to inputs used in exempted final products, where separate accounts were not maintained, was treated as sufficient compliance under Rule 6 of the Cenvat Credit Rules, 2002. The High Court accepted the Tribunal's reliance on Chandrapur Magnet Wires Ltd. and Maize Products, holding that once the credit relatable to exempted clearances is reversed, no further amount calculated at 8% of the exempted goods' value is payable. The Tribunal's approach was found consistent with the scheme of Rule 6 and binding precedent, and the appeal failed because no substantial question of law arose.

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Issues: Whether reversal of Cenvat credit attributable to inputs used in exempted final products, after opting not to maintain separate accounts, was sufficient compliance so as to avoid payment of 8% of the total price of the exempted goods under the Cenvat Credit Rules, 2002.

Analysis: The Tribunal had followed the Supreme Court's decision in Chandrapur Magnet Wires Ltd. and the jurisdictional High Court's decision in Maize Products, which recognized that where the assessee reverses the credit relatable to exempted clearances, the requirement under the rule stands satisfied. The High Court found that the Tribunal's view was in consonance with the scheme of Rule 6 of the Cenvat Credit Rules, 2002 and with the binding precedents. No legal infirmity was shown in the Tribunal's approach.

Conclusion: Reversal of the relevant Cenvat credit was held to be sufficient compliance, and the demand to pay 8% of the price of the exempted goods was not sustained.

Final Conclusion: The appeal failed because no substantial question of law arose from the Tribunal's order.

Ratio Decidendi: Where credit attributable to exempted goods is duly reversed, the assessee is treated as having complied with the obligation under Rule 6 of the Cenvat Credit Rules, 2002, and a further demand calculated at 8% of the exempted value is not warranted.

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