CENVAT credit under Rule 6: no reversal liability arises when no common credit is taken for non-excisable goods.

Rule 6 of the CENVAT Credit Rules, 2004 bars credit on inputs used exclusively for exempted goods and requires separate accounts where common credit is taken for dutiable and exempted goods; after the 01.03.2015 amendment, non-excisable goods are covered for this purpose. On the stated facts, supported by the Chartered Accountant's certificate, the assessee had not taken CENVAT credit on inputs used for the non-excisable goods or on common inputs up to the stage of emergence of the by-products. Accordingly, compliance with Rule 6(1) and Rule 6(2) meant no liability arose under Rule 6(3), and the demand, interest, and penalty could not be sustained.

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Issues: Whether the appellant was liable to pay an amount under Rule 6(3) of the CENVAT Credit Rules, 2004 in respect of non-excisable goods cleared from the factory.

Analysis: Rule 6 of the CENVAT Credit Rules, 2004 prohibits credit on inputs used exclusively for exempted goods, requires separate accounts where both dutiable and exempted goods are manufactured, and mandates payment under Rule 6(3) where common credit is taken without maintaining separate records. After the amendment with effect from 01.03.2015, non-excisable goods are included within exempted goods for the purpose of Rule 6. On the facts established by the Chartered Accountant's certificate, the appellant had not availed CENVAT credit on inputs used for the non-excisable goods or on common inputs used up to the stage of emergence of such by-products.

Conclusion: The appellant had complied with Rule 6(1) and Rule 6(2), and no liability arose under Rule 6(3).

Final Conclusion: The demand, interest, and penalty could not be sustained, and the appeal succeeded with consequential relief.

Ratio Decidendi: Where no CENVAT credit is availed on inputs used for exempted or non-excisable goods, and no common credit is taken in relation to both dutiable and such goods, the payment obligation under Rule 6(3) does not arise.

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