2023 (9) TMI 411 - HC - Central Excise

Refund claim - payment of amount equivalent to the CENVATE credit attributable to inputs and input services used in relation to the manufacture of exempted clearance of petroleum product namely Liquefied Petroleum Gas (LPG) - HELD THAT - The Co-ordinate Bench of this Court in THE PRINCIPAL COMMISSIONER, CENTRAL GST AND CENTRAL EXCISE VERSUS M/S RELIANCE INDUSTRIES LTD. JAMNAGAR 2023 (8) TMI 121 - GUJARAT HIGH COURT while dismissing the Tax Appeal held that no question of law much less any substantial question of law can be said to be arising. Appeal stands dismissed.

Summary

Issues involved:
The judgment deals with the issue of whether LPG is considered a by-product or not, as well as the applicability of Rule 6(1) and 6(2) of the Cenvat Credit Rules, 2002.

Applicability of Rule 6(1) and 6(2) of the Cenvat Credit Rules, 2002:
The Court referenced a previous case where it was held that CENVAT credit is admissible for inputs used in the manufacture of dutiable goods and inadmissible for inputs used in the manufacture of exempted goods. It was further explained that if a manufacturer cannot produce the dutiable final product using a lesser quantity of inputs, then the entire input must be attributed to the manufacture of the dutiable final product. The Court emphasized that maintaining separate accounts or paying a percentage of the total price of exempted goods would not be necessary in cases where no input is specifically used for the manufacture of exempted goods. The Court concluded that the appellant in the present case had taken CENVAT credit only on the quantity of input intended for use in the manufacture of dutiable goods, thus the question of invoking sub-rule (2) of Rule 6 of the Rules did not arise. Therefore, the Court dismissed the appeal as no substantial question of law arose.

LPG as a By-Product:
The Court noted that the issue of whether LPG is a by-product or not had become academic based on previous judgments. It referred to a case where the Apex Court held that if a dutiable final product cannot be manufactured using a lesser quantity of inputs, then the entire input must be considered as used in the manufacture of the dutiable final product, even if another exempt final product emerges inevitably. The Court emphasized that the intention of the Government was evident from trade notices and that the Tribunal should have considered these notices for the interpretation of exemption notifications. Ultimately, the Court concluded that the issue of whether LPG is a by-product or not was academic and did not require a decision. The appeal was therefore dismissed.