Common input credit rules apply to exempted clearances when separate accounts are not maintained for dutiable and exempt goods.

Where a manufacturer clears both dutiable and exempted goods and does not maintain separate input accounts, Rule 6(3)(b) of the Cenvat Credit Rules applies to common inputs used for exempted clearances. The fact that the exempted goods were described as waste did not matter where they were regularly sold as exempted products. On those facts, the requirement to pay 10% of the sale price of the exempted goods was attracted, and the demand and penalty were sustained.

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Issues: Whether, where the assessee manufactured both dutiable and exempted goods without maintaining separate accounts of inputs, Rule 6(3)(b) of the Cenvat Credit Rules applied so as to require payment of 10% of the sale price of the exempted goods.

Analysis: The assessee manufactured barley malt as well as goods cleared at nil rate of duty, including malt culms and jao bhusi, and did not maintain separate accounts for inputs attributable to dutiable and exempted clearances. On these facts, the provision dealing with common inputs used for exempted goods was attracted, and the contention that the cleared goods were mere waste did not displace the admitted position that they were regularly sold as exempted clearances.

Conclusion: Rule 6(3)(b) was applicable, and the demand and penalty were rightly sustained.

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