Tribunal: Separate Accounts for Dutiable vs. Exempted Goods Upheld

The Tribunal upheld the decision that the respondent must maintain separate accounts for inputs used in manufacturing dutiable and exempted goods. The respondent was allowed to avail cenvat credit on inputs used in dutiable final products but not on exempted finished goods. The appeal by the Revenue was dismissed, emphasizing the necessity of complying with the Cenvat Credit Rules to avoid disputes over cenvat credit.

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Issues:
1. Interpretation of Cenvat Credit Rules regarding maintaining separate accounts for inputs used in manufacturing dutiable and exempted goods.
2. Applicability of Rule 6(3)(b) of the Cenvat Credit Rules, 2004.
3. Denial of cenvat credit on inputs contained in exempted final finished goods.

Analysis:
1. The case involved a dispute regarding the availing of cenvat credit on inputs used for manufacturing both dutiable and exempted goods without maintaining separate records, as required under Rule 6 of the Cenvat Credit Rules. The respondent had availed credit on common inputs for products like Vanaspati and fatty acids. The Revenue contended that since the respondent did not maintain separate records for cenvatable inputs used in manufacturing dutiable and exempted goods, they were required to pay 10% of the total price at the time of clearance of exempted goods as per Rule 6(3)(b) of the Cenvat Credit Rules.

2. The Tribunal observed that the respondent was not manufacturing exempted goods until March 1, 2005, when Vanaspati became exempt from duty. From that date onwards, the respondent was obligated to maintain separate accounts for inputs used in manufacturing dutiable and exempted products. The Ld. Commissioner (A) correctly held that cenvat credit on inputs contained in exempted finished goods as of March 1, 2005, was not available to the respondent. However, the Commissioner allowed the respondent to avail cenvat credit on inputs contained in dutiable final products like fatty acids. The Tribunal concurred with this finding and concluded that the denial of cenvat credit on dutiable final products was unwarranted.

3. Ultimately, the Tribunal found no grounds for proceeding against the respondent and upheld the impugned order. The appeal by the Revenue was dismissed, and the cross objection was disposed of accordingly. The judgment highlighted the importance of maintaining separate records for inputs used in manufacturing dutiable and exempted goods to comply with the Cenvat Credit Rules and avoid disputes over availing cenvat credit.

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