Cenvat credit compliance: later reversal with interest does not cure failure to maintain separate accounts or follow the prescribed option.

Where an assessee manufactures both dutiable and exempted goods, the Cenvat Credit Rules require either maintenance of separate accounts or compliance with the prescribed option if separate accounts are not maintained. A subsequent reversal of credit with interest does not, by itself, discharge the obligation to pay the stipulated amount on exempted goods when that statutory choice was not followed. The Gujarat High Court treated the issue as already conclusively settled between the same parties on the same legal question, so the later appeal could not reopen it and was rejected in favour of the assessee.

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Issues: Whether subsequent reversal of credit with interest is sufficient to discharge the demand of 8% or 10% of the value of exempted goods where separate accounts were not maintained and the assessee did not follow the option under the relevant Cenvat Credit Rules.

Analysis: The issue was already answered by the Court in an earlier decision between the same parties on the same question of law. The earlier ruling construed the obligation under the Cenvat Credit Rules governing manufacture of dutiable and exempted products, and held that the statutory scheme required either maintenance of separate accounts or compliance with the prescribed option where separate accounts were not maintained. In view of that binding precedent, the question raised again did not survive as a fresh controversy and was treated as settled.

Conclusion: The issue is decided against the Revenue and in favour of the assessee.

Final Conclusion: The appeal was rejected because the legal question stood concluded by the earlier decision of the Court.

Ratio Decidendi: Where an identical question of law has already been conclusively decided by the Court on the same statutory framework, the subsequent appeal on that question is governed by the earlier binding ruling.

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