Rule 6 compliance switch permitted when separate accounts are maintained, and the earlier order was legally mistaken.

An assessee that had initially opted to pay under Rule 6(3) of the Cenvat Credit Rules, 2004 could shift to compliance under Rule 6(2) by maintaining separate accounts from 01.07.2014. The Tribunal held that Explanation I to Rule 6(3) only bars withdrawal of the Rule 6(3) option during the remaining part of the financial year, and does not prevent a taxpayer from abandoning that route and instead complying under Rule 6(2). Applying the principle that an explanation cannot override the main provision, the Tribunal found no legal bar to the switch and held that the earlier final order suffered from a mistake of law.

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Issues: Whether the assessee could, after initially opting for payment under Rule 6(3) of the Cenvat Credit Rules, 2004, revert to compliance under Rule 6(2) by maintaining separate accounts from 01.07.2014, and whether the earlier final order suffered from an error of law warranting rectification.

Analysis: The Tribunal held that the assessee had merely shifted to the compliance mechanism under Rule 6(2) by maintaining separate accounts. It distinguished the restriction in Explanation I to Rule 6(3), which prevents withdrawal of an option once exercised during the remaining part of the financial year, from a situation where the assessee chooses to stop availing the Rule 6(3) option and instead comply under Rule 6(2). Relying on the settled principle that an explanation cannot override the main provision, the Tribunal found that Rule 6(3) did not prohibit such a switch to Rule 6(2).

Conclusion: The assessee was entitled to exercise the option under Rule 6(2) with effect from 01.07.2014, and the earlier final order contained a mistake of law.

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