Chapter X clearances under an exemption notification do not automatically make goods exempted goods for Cenvat credit denial.

Goods cleared under Chapter X procedure pursuant to Notification No. 6/2002-CE were not treated as exempted goods for purposes of Rule 6 of the Cenvat Credit Rules, 2002. The Tribunal noted that the same goods had already been held in the assessee's own case not to acquire exempted-goods status merely because they were cleared under Chapter X, and that binding view was followed by the Commissioner (Appeals). On that basis, the demand, penalty, and interest raised by treating the clearances as exempted goods could not be sustained, and denial of Cenvat credit was held unsustainable.

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Issues: Whether goods cleared under Notification No. 6/2002-CE through Chapter-X procedure could be treated as exempted goods for denying Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2002.

Analysis: The dispute turned on the character of goods cleared under the notification and Chapter-X procedure. The Tribunal noted that in the respondent's own case, the same goods had already been held not to be exempted goods merely because they were cleared under Chapter-X procedure. The Commissioner (Appeals) had followed that binding view and set aside the demand, penalty, and interest. Since the issue stood covered by the earlier decision on the same goods, the demand under Rule 6 could not be sustained.

Conclusion: Goods cleared under Chapter-X procedure pursuant to the exemption notification were not liable to be treated as exempted goods for the purpose of Rule 6, and the denial of Cenvat credit was not sustainable.

Ratio Decidendi: Clearance of goods under Chapter-X procedure pursuant to an exemption notification does not, by itself, make the goods exempted goods for the purpose of Rule 6 of the Cenvat Credit Rules.

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