Pharma manufacturer wins appeal on Cenvat Credit compliance. Ruling invalidates demand under Rule 6(3)(b).

The Tribunal held in favor of the appellant, a pharmaceutical manufacturer, in a case concerning compliance with Rule 6(2) of Cenvat Credit Rules, 2004. Despite not maintaining separate accounts for dutiable and exempted final products, the appellant's compliance with the retrospective amendment to Rule 6(3) by Finance Act, 2010 was deemed sufficient. The Tribunal set aside the Commissioner's order, ruling that the demand under Rule 6(3)(b) was invalid, and allowed the appeal.

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Issues:
1. Whether the appellant complied with the provisions of Rule 6(2) of Cenvat Credit Rules, 2004 regarding maintaining separate accounts for dutiable and exempted final productsRs.
2. Whether the provisions of Rule 6(3)(b) apply for payment of an amount equal to 10% of the sale value of the exempted final productRs.
3. Whether the retrospective amendment to Rule 6(3) by Finance Act, 2010 impacts the caseRs.

Analysis:
1. The appellant, a pharmaceutical manufacturer, used 6 common input services for both dutiable and exempted final products. They did not maintain separate accounts for these products as required by Rule 6(2). The Department demanded a significant amount under Rule 6(3)(b) due to this non-compliance.

2. The appellant argued that the retrospective amendment to Rule 6(3) by Finance Act, 2010 allowed manufacturers to reverse proportionate credit even without separate accounts. The appellant had foregone credit for exempted final products, and thus, Rule 6(3)(b) should not apply. The Commissioner's order was challenged on this basis.

3. The Tribunal noted the retrospective applicability of the amended Rule 6(3) and cited a relevant judgment supporting the appellant's position. The appellant's compliance with the rule by foregoing credit for exempted products was considered sufficient, rendering the demand under Rule 6(3)(b) invalid. The Tribunal set aside the Commissioner's order and allowed the appeal in favor of the appellant.

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