Exemption for captively consumed inputs available where Rule 6 compliance prevents fixed-percentage reversal under Cenvat rules.

Exemption for inputs captively consumed in manufacture is available where the assessee meets the conditions of Notification No.67/1995-CE and has complied with Rule 6 of the Cenvat Credit Rules, 2004; compliance precludes applying the fixed-percentage reversal under Rule 6 to negate the notification benefit. The tribunal applied consistent earlier decisions on identical facts and found no higher forum reversal or distinction, set aside orders confirming demands, and allowed the appeals, holding that demands based on applying Rule 6 reversal cannot be sustained when notification conditions and Rule 6 obligations are satisfied.

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Issues: Whether relays captively consumed in the manufacture of control panels are eligible for exemption under Notification No.67/1995-CE dated 16.03.1995 where the assessee has complied with Rule 6 of the Cenvat Credit Rules, 2004.

Analysis: The issue concerns interpretation of Notification No.67/1995-CE in conjunction with Rule 6 of the Cenvat Credit Rules, 2004 and the availability of the exclusion under clause (vii) where the assessee complied with the obligations under Rule 6. The Tribunal followed earlier final decisions in the appellant's own cases and allied precedents addressing identical facts and legal questions, which held that where the conditions of the notification are met and Rule 6 obligations are complied with, the fixed-percentage reversal under Rule 6 does not apply and the exemption under Notification No.67/1995-CE is available. The Department did not demonstrate that those earlier Tribunal orders have been reversed or distinguished by a higher forum.

Conclusion: The impugned orders confirming demand are set aside and the appeals are allowed; the exemption under Notification No.67/1995-CE applies in favour of the assessee where Rule 6 of the Cenvat Credit Rules, 2004 has been complied with.

Ratio Decidendi: Where an assessee satisfies the conditions of Notification No.67/1995-CE and complies with Rule 6 of the Cenvat Credit Rules, 2004, the exemption for captively consumed inputs is available and demands based on application of Rule 6 fixed-percentage reversal cannot be sustained.

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