Separate accounts under Cenvat Credit rules must be verified on the core factual record before any reversal liability is fixed.

Where Rule 6(1) requires separate accounts only for cenvatable inputs used in dutiable and exempted goods, ancillary objections such as common storage, use of non-cenvatable inputs, or a common furnace do not by themselves establish liability under Rule 6(3); the ative question remains whether the required separate records were in fact maintained. The Tribunal remanded the matter to the original adjudicating authority for verification of that factual issue and did not record a final finding on reversal liability. The limitation issue was also remanded for fresh consideration together with the applicability of the cited precedent.

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Issues: (i) whether the assessee was liable to pay an amount under Rule 6(3) of the Cenvat Credit Rules on the ground that separate records were not maintained for inputs used in dutiable and exempted final products; and (ii) whether the Revenue's appeal on limitation could be finally decided or required reconsideration in light of the remand.

Issue (i): whether the assessee was liable to pay an amount under Rule 6(3) of the Cenvat Credit Rules on the ground that separate records were not maintained for inputs used in dutiable and exempted final products.

Analysis: Rule 6(1) requires maintenance of separate accounts only in respect of cenvatable inputs used in exempted and dutiable goods. No statutory requirement was found for maintaining separate records for non-cenvatable inputs, for storing both categories separately, or for using a separate furnace. The central factual question was whether the assessee had in fact maintained the required separate records for the relevant inputs, and that aspect required verification.

Conclusion: The issue was remanded to the original adjudicating authority for verification, and no final finding on liability under Rule 6(3) was recorded.

Issue (ii): whether the Revenue's appeal on limitation could be finally decided or required reconsideration in light of the remand.

Analysis: The adjudicating authority had extended the benefit of limitation on the basis that there was no suppression or misstatement. The Revenue sought to rely on precedent concerning demands calculated as a percentage of the value of exempted goods. Since the assessee's matters were being sent back for fresh adjudication, the limitation issue was also left for reconsideration by the adjudicating authority along with the applicability of the cited decision.

Conclusion: The limitation issue was also remanded for fresh decision and not finally determined.

Final Conclusion: The common order did not finally adjudicate the substantive tax liability or the limitation question, and both sets of appeals were sent back for fresh consideration by the original adjudicating authority.

Ratio Decidendi: Where the statute requires separate accounts only for cenvatable inputs, ancillary objections such as non-separate storage, non-cenvatable inputs, or common machinery do not by themselves establish liability under the reversal provision; the decisive question remains whether the required separate records were maintained.

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