Rule 6 Cenvat credit reversal was held inapplicable for exempted dehydrated coal tar during the relevant period.

Rule 6 of the Cenvat Credit Rules, 2004 was treated as inapplicable for the relevant period to exempted dehydrated coal tar manufactured with common fuel and flue gas. The Tribunal accepted that the earlier common-input regime continued until the later explanatory amendment came into force, and that credit could not be denied where inputs were used directly or indirectly in or in relation to manufacture. It also noted that Rule 6 did not apply to non-excisable goods during that period. On that basis, reversal of credit or payment of the demanded amount was not required and the Revenue's challenge failed.

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Issues: Whether the respondent was required to reverse Cenvat credit or pay an amount under Rule 6 of the Cenvat Credit Rules, 2004 for exempted dehydrated coal tar manufactured using common fuel and flue gas, and whether the demand raised by the Revenue was sustainable.

Analysis: The dispute turned on the applicability of Rule 6 to the relevant period, when the respondent manufactured both dutiable and exempted products using common inputs. The record showed that the process of dehydrated coal tar involved heat carried through flue gas generated from burning fuel, and the Tribunal accepted the view that the ratio of the earlier common-input provisions continued to govern the field until the later explanatory amendment. It further held that Rule 6 was not applicable to non-excisable goods during the relevant period, and relied on the settled position reflected in the case law and departmental circulars that credit is not denied where inputs are used in or in relation to manufacture of final products, directly or indirectly.

Conclusion: The respondent was not liable to reverse credit or pay the demanded amount under Rule 6 for the period in question, and the Revenue's appeal failed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) and confirmed that the demand under Rule 6 was unsustainable for the relevant period.

Ratio Decidendi: For the relevant period, Rule 6 of the Cenvat Credit Rules, 2004 did not require reversal of credit for inputs used in the manufacture of exempted or non-excisable goods where the later explanatory amendment had not yet come into force.

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