CENVAT credit on fuel used for exempted goods is not admissible where Rule 6(1) bars common input credit.

Rule 6(1) of the CENVAT Credit Rules, 2002 and 2004 applies to fuel used as a common input for both dutiable and exempted goods. The Tribunal noted that the Supreme Court had already settled that the prohibition covers all inputs, including fuel, and that the exclusion of fuel from the separate-accounting mechanism in Rule 6(2) does not confer a right to credit where the fuel is used to manufacture exempted goods. Accordingly, CENVAT credit attributable to exempt clearances was not admissible, and the demand was sustained.

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Issues: Whether proportionate CENVAT credit was required to be reversed on fuel used commonly in the manufacture of dutiable and exempted goods under Rule 6(1) of the CENVAT Credit Rules, 2002 and 2004.

Analysis: The dispute turned on whether fuel, when used as a common input for both dutiable and exempted products, attracted the bar under Rule 6(1). The Tribunal noted that the issue had already been settled by the Supreme Court, which held that Rule 6(1) is plenary and applies to all inputs including fuel. The exclusion of fuel from the separate-accounting mechanism in Rule 6(2) does not create an entitlement to credit where the fuel is used in the manufacture of exempted goods. On that basis, credit attributable to exempted clearances was not permissible.

Conclusion: The appellant was not entitled to retain CENVAT credit on fuel used in the manufacture of exempted goods, and the demand was sustained.

Ratio Decidendi: CENVAT credit is not admissible on fuel used in the manufacture of exempted final products, and the exclusion of fuel from the separate-accounting rule does not override the prohibition contained in Rule 6(1).

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