Cenvat credit cannot be denied for using a common account where separate accounts are not required under the rules.

A manufacturer-cum-service provider could not be denied Cenvat credit merely because it maintained a common credit account instead of separate accounts for manufacturing activity and output services. The assessee used the credit only against tax on output services and not for clearance of manufactured products, and the Cenvat Credit Rules did not require separate accounts in such circumstances. On that prima facie view, denial of credit was not justified at the interim stage, and the assessee established a strong case for waiver of the entire pre-deposit with stay of recovery pending appeal.

---

---

Issues: Whether an assessee engaged both in manufacture and in provision of output services could be denied Cenvat credit on the ground that it maintained a common credit account instead of separate accounts.

Analysis: The assessee maintained a common Cenvat credit account for inputs and input services and used the credit only against tax on output services, not for clearance of manufactured products. The governing Cenvat Credit Rules did not prescribe that a manufacturer-cum-service provider must maintain separate Cenvat credit accounts for manufacturing activity and output services. On that prima facie view, the availing and utilisation of credit could not be denied at the interim stage.

Conclusion: The assessee made out a strong prima facie case and was entitled to waiver of the entire pre-deposit, with stay of recovery during pendency of the appeal.

---