Appellant not liable for separate accounts: Cenvat Credit Rules clarified

The appellant was not liable to pay the demanded amount, interest, or penalty for not maintaining separate accounts for dutiable and exempted goods under Rule 6(3) of the Cenvat Credit Rules, 2004. The Member (Judicial) held that the rule applies when the assessee manufactures both dutiable and exempted final products, which was not the case here. The goods cleared were dutiable goods to a special customer under a specific notification, not exempted goods. Relying on precedents, the Member allowed the appeal, setting aside the impugned order.

---

---

Issues:
- Non-maintenance of separate account for dutiable and exempted goods under Rule 6(3) of Cenvat Credit Rules, 2004.

Analysis:
The case involved a demand raised against the appellant for not maintaining separate accounts for dutiable and exempted goods as per Rule 6(3) of the Cenvat Credit Rules, 2004. The appellant, a manufacturer of various goods, had cleared some goods to a specific customer without payment of duty under Notification No. 10/1997-CE. The Revenue argued that since the goods were cleared without duty payment and separate accounts were not maintained, the appellant should pay 5% to 6% of the value of goods cleared to the customer. The appellant contended that the provisions of Rule 6(3) were not applicable as they were manufacturing dutiable goods and the goods cleared were to an exempted customer. The appellant relied on precedents like CCE v. Tanfac Industries Ltd. and SU Motors Pvt. Ltd. v. CCE, Mumbai to support their argument.

The Authorized Representative for the Department opposed the appellant's contentions, stating that since the goods were cleared to an exempted customer, the appellant was manufacturing exempted goods and should maintain separate accounts. After hearing both parties, the Member (Judicial) analyzed the situation and concluded that Rule 6(3) applies when the assessee manufactures both dutiable and exempted final products. In this case, the goods manufactured were not exempted, but rather dutiable goods cleared to a special customer under the mentioned notification. Citing the judgments in Tanfac Industries Limited and SU Motors Pvt. Limited, the Member held that the appellant was not liable to pay the demanded amount, interest, or penalty. Consequently, the impugned order was set aside, and the appeal was allowed.

---