Cenvat credit on furnace oil remains available where job-work clearances are not exempted goods under Rule 6(2).

Rule 6(2) of the Cenvat Credit Rules, 2004 applies only when common inputs or input services are used for both dutiable and exempted goods without separate accounts. Furnace oil credit could not be denied merely because the assessee also undertook job work, since the job-work clearances were not exempted goods for Rule 6(2) purposes where duty remained payable by the principal manufacturer. The CESTAT held that the assessee was manufacturing excisable goods and job-work goods, not exempted goods, and therefore the disallowance of credit was unsustainable. Credit of furnace oil was admissible.

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Issues: Whether credit of furnace oil used in the manufacture of dutiable goods and job-work goods could be denied on the ground that separate accounts were not maintained under Rule 6(2) of the Cenvat Credit Rules, 2004.

Analysis: Rule 6(2) applies where an assessee manufactures both dutiable and exempted goods and does not maintain separate accounts of inputs or input services. The appellant was manufacturing excisable goods and also undertaking job work, but was not manufacturing exempted goods. Job-work clearances could not be treated as exempted goods merely because they were cleared without payment of duty, since duty was payable by the principal manufacturer. The denial of credit on the footing that job-work goods were exempted goods was therefore unsustainable.

Conclusion: The credit of furnace oil was admissible and the disallowance under Rule 6(2) was not justified, in favour of the assessee.

Ratio Decidendi: Rule 6(2) of the Cenvat Credit Rules, 2004 applies only where common inputs are used for dutiable and exempted goods; job-work goods cleared without duty, where duty is payable by the principal manufacturer, are not exempted goods for that purpose.

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