Separate input records defeated Rule 6 demand where credit was taken only for dutiable goods manufacture.

Rule 6 of the CENVAT Credit Rules, 2001 was held inapplicable where the manufacturer maintained separate records for inputs used in exempted and dutiable goods and did not avail credit on inputs attributable to exempted goods. The record showed segregation of inputs through invoices and separate inventory maintenance, establishing that credit was taken only on inputs used for dutiable wagons. On those facts, the demand under Rule 6 was not sustainable.

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Issues: Whether the demand under Rule 6 of the CENVAT Credit Rules, 2001 was sustainable when the manufacturer maintained separate records for inputs used in exempted and dutiable goods and did not avail credit on inputs used for exempted goods.

Analysis: Rule 6 requires a manufacturer using common inputs for exempted and dutiable goods to maintain separate records for receipt, consumption, and inventory of inputs meant for exempted goods. On the facts found, credit was availed only on inputs used in the manufacture of dutiable wagons, while no credit was taken on inputs used for exempted wagons. The record included invoices and separate inventory maintenance showing segregation of inputs for the two categories of goods.

Conclusion: The demand was not sustainable and the assessee succeeded on the issue.

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