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TMI Blog2023 (3) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... pin Kumar Jain with Shri Ramnath Prabhu, Advocates for the Appellant Shri Deepak Bhilegaonkar, Additional Commissioner, Authorised Representative for the Respondent PER: SANJIV SRIVASTAVA These appeals are directed against Order-in-Appeal No. YDB/11 12/LTU/MUM/2011 dated 22.12.2011 passed by the Commissioner of Central Excise Service Tax (Appeals), LTU, Mumbai. By the impugned order, following has been held:- 15. In view of the foregoing discussions, I find that the appellants were not eligible for the cenvat credit on the inputs gone in the manufacture of the final product viz. LPG cleared at NIL rate of duty under Notfn. No.4/2006-CE dated 1.3.2006, as amended, and duty reversed/paid by them on such inputs was correct and the refund claims rejected by the respondent was correct and in order. In view of the above, both the impugned orders-in-original are upheld and the appeals are rejected. 2.1 Appellant is manufacturer of dutiable products viz. motor spirit, high speed diesel, liquid petroleum gas, benzene, dimineralised water, filtered sea water etc. During the course of manufacture of these products, LPG which is a by-product emerges and cleared using exemption and supplied thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere not exempted goods as the issue of it being so had, in the case of the appellant themselves, been decided otherwise by the Tribunal to hold that 4.6 The identical issue has been considered by the jurisdictional Hon'ble Gujarat High Court in the case of Sterling Gelatin reported in 2011 (270) ELT 200 (Guj.) wherein in the issue before the Hon ble Court was that whether the assessee was required to pay an amount of 8%/10% of the value of exempted goods under Rule 6 (3) (b) of the CCR, as one of the inputs namely Hydrochloric acid was used in the manufacture of dutiable goods (Gelatin) as well as for manufacture of exempted goods Dicalcium Phosphate and the assessee was not maintaining separate account under rule 6(2) of CCR,2004. The Hon‟ble Gujarat High Court after examining the provision of Cenvat scheme and the argument that the assessee therein could not have manufactured Gelatin using a lesser quantity of Hydrochloric acid held that rule 6 (1) of the CCR itself would not come into play. The relevant observation of Hon ble High Court is reproduced below:- 6. The undisputed facts of the case are that for the purpose of manufacture of Gelatin, cleared bone chips are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed than that required for manufacturing Gelatin or that by using a smaller amount of Hydrochloric Acid, the production of Mother Liquor could be averted. In the manufacturing process adopted by the assessee, it is not possible to manufacture Gelatin without Mother Liquor coming into existence. Thus, when the entire quantity of input viz. Hydrochloric Acid is used in the manufacture of the final product being Gelatin which is a dutiable product, the mere fact that a by-product emerges during the process would not bring the by-product within the ambit of Rule 6 of the Rules so as to call for maintaining separate accounts in respect of the same. When the entire quantity of input is used in the manufacture of Gelatin, the question of maintaining separate accounts or of paying a percentage of the total price of the exempted goods would not arise. In the peculiar facts of the present case, sub-rule (1) of Rule 6, itself would not come into play inasmuch the manufacturer does not deliberately use any quantity of the inputs, viz. Hydrochloric Acid for manufacturing Mother Liquor, the entire Hydrochloric Acid is used in the manufacture of Gelatin. Thus, when no input is specifically used f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether or not the new applicable rules, viz., Cenvat Credit Rules, 2002/2004 contain any provisions akin to Rule 57CC and Rule 57D of the erstwhile Central Excise Rules, 1944. Applying the ratio the above judgment which directly applicable to the facts of the present case for the reason that in the aforesaid judgment the appellant intended to manufacture gelatin as the main product and exempted goods i.e. Dicalcium Phosphate generated unavoidably in the course of manufacture of gelatin same quantum of input and input services used for manufacture of gelatin. In the present case the entire quantity of input and input services was used for manufacture of dutiable products namely motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. only because of generation of LPG the quantum of input and input services used for manufacture of motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. does not get reduced that same entire quantity of input and input services has been used in manufacture of dutiable goods even though the LPG is generated in the stream of entire manufacture process. The Cenvat credit of only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of ethylene and propylene, the emergence of ethane and methane was inevitable. Hence, while it is no doubt correct to say that the ethylene and propylene have been used in or in relation to the manufacture of ethane and methane, the identical quantity of the same goods has simultaneously been used in the manufacture of ethylene and propylene. The emergence of ethane and methane is, therefore, by itself is not a ground to deny the benefit of the exemption notification. 30. We have heard the learned counsel for the parties at length and perused the judgments cited at the Bar. The Tribunal s finding that the ethylene and propylene used as refrigerant has been used in or in relation to the manufacture of the same goods. The inevitable and automatic emergence of ethane and methane, therefore, by itself is no ground for denying the exemption contained in the notification. The Tribunal came to the categoric finding that the respondent could not have manufactured ethylene and propylene without manufacturing its byproducts ethane and methane. The Tribunal held that in any technology the emergence of ethane and methane was inevitable and hence while it is no doubt correct to say that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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