Separate accounts for dutiable and exempted goods can defeat Rule 6 demand when concurrent factual findings are unchallenged.

Separate records for inputs used in dutiable and exempted goods, when accepted by both the Commissioner (Appeals) and the Tribunal and not disproved by the department, defeat a demand under Rule 6 of the Cenvat Credit Rules, 2002. The High Court found no evidence to dislodge the concurrent factual findings that the assessee maintained distinct accounts, so the controversy did not raise any substantial question of law. On that basis, the demand, interest and penalty founded on Rule 6 were not sustainable and the departmental appeal failed.

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Issues: Whether the Tribunal was justified in holding that the assessee maintained separate accounts for inputs used in dutiable and exempted products and, therefore, that the demand under Rule 6 of the Cenvat Credit Rules, 2002 was not sustainable.

Analysis: The material on record showed that both the Commissioner (Appeals) and the Tribunal had accepted the assessee's stand that separate records were maintained for exempted and dutiable goods and that the records produced had not been discredited by the adjudicating authority. The High Court found that the department had not produced any evidence to dislodge those factual findings. In the presence of concurrent findings by the lower authorities, the Court held that the controversy did not raise any substantial question of law.

Conclusion: The finding that the assessee maintained separate accounts was left undisturbed and the demand, interest and penalty founded on Rule 6 did not survive.

Final Conclusion: The departmental appeal failed on facts and no substantial question of law arose for consideration.

Ratio Decidendi: Concurrent findings of fact, when not shown to be perverse or unsupported by evidence, do not give rise to a substantial question of law in a tax appeal.

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