Exported exempted goods under bond were outside Rule 6 reversal, so the demand could not stand.

Where exempted goods are exported out of India under bond, Rule 6(5) of the Cenvat Credit Rules, 2002 excludes the application of Rule 6(1), 6(2) and 6(3). Accordingly, an amount equal to 8% of the value of such exported exempted goods was not payable merely because Cenvat credit had been taken on common inputs used for both dutiable and exempted goods. The departmental objection based on the absence of separate accounts or inventory did not defeat the statutory exception, and the demand under Rule 6(3) could not be sustained.

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Issues: Whether an amount equal to 8% of the value of exempted goods exported out of India under bond was payable under Rule 6 of the Cenvat Credit Rules, 2002 when Cenvat credit had been taken on common inputs used for both dutiable and exempted goods.

Analysis: The goods in question were exempted goods under Notification No. 6/02-C.E. and had been exported out of India under bond without payment of duty. Rule 6(5) of the Cenvat Credit Rules, 2002 expressly excludes the application of Rule 6(1), 6(2) and 6(3) to exempted goods exported under bond. Once that statutory exception applied, the demand for an amount equal to 8% of the value of the exported exempted goods could not be sustained, regardless of the department's objection regarding separate accounts or inventory. The Tribunal also followed its earlier decisions on the availability of relief in respect of exported exempted goods.

Conclusion: The demand under Rule 6(3) was not payable on the exported exempted goods and the assessee succeeded.

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