CENVAT credit reversal under Rule 6 needs a separate exempted product; concessional clearances alone do not trigger reversal.

Rule 6(3)(b) of the CENVAT Credit Rules, 2004 applies only where common inputs are used to make both dutiable and exempted final products, or goods chargeable to nil duty. Clearance of dissolved acetylene gas to a specified buyer without duty under Notification No. 82/84-CE, after following the prescribed concessional removal procedure, was treated as a clearance of the same excisable product under a remission or exemption mechanism, not as a separate exempted final product. Because the assessee manufactured only one product and no distinct exempted product existed, the condition for reversing credit under Rule 6 was absent.

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Issues: Whether Rule 6(3)(b) of the CENVAT Credit Rules, 2004 required reversal of credit where the assessee manufactured only one final product, dissolved acetylene gas, and cleared part of it to a specified buyer without duty under Notification No. 82/84-CE following the prescribed concessional removal procedure.

Analysis: Rule 6 applies where a manufacturer uses common inputs in the manufacture of both dutiable and exempted final products, or final products chargeable to nil duty. The clearance to the specified buyer was not of a second exempted product, but of the same excisable product under a concessional exemption mechanism after compliance with the prescribed procedure under the 2001 Rules. The terms remission and exemption were treated as materially overlapping for this purpose, and the goods could not be regarded as exempted goods within Rule 2(d) merely because duty was not paid on the particular clearance. Since there was only one manufactured product and no separate exempted final product, the statutory condition for invoking Rule 6 was absent.

Conclusion: Rule 6(3)(b) of the CENVAT Credit Rules, 2004 was not applicable, and the demand for reversal of credit was unsustainable in favour of the assessee.

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