Cenvat credit cannot be denied for lack of prescribed separate accounts when records show exclusive taxable use and reversal of common input credit.

Cenvat credit cannot be denied merely because separate accounts were not maintained in a prescribed form where records substantively show that most input services were used exclusively for taxable output service and credit on common input services was reversed. The absence of a specific proforma does not defeat compliance when the available records establish the required segregation in substance. On those facts, the denial of credit was not justified and consequential relief followed.

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Issues: Whether Cenvat credit could be denied on the ground that separate accounts were not maintained for taxable and exempted services, despite records showing exclusive use of most input services for taxable output service and reversal of credit on common input services.

Analysis: The denial was founded only on the absence of a prescribed proforma for separate accounts. The records produced were sufficient to show that the input services other than the identified common services were attributable to taxable output service. The credit pertaining to common input services had already been reversed. In such circumstances, the requirement of maintaining separate accounts was satisfied in substance, and there was no material to show that any other services were commonly used without reversal of credit.

Conclusion: The denial of credit was not justified, and the assessee was entitled to the credit and consequential relief.

Ratio Decidendi: Where records substantively establish exclusive use of input services for taxable output service and common input service credit has been reversed, Cenvat credit cannot be denied merely for want of a prescribed form of separate accounts.

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