TMI Blog2008 (8) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... f petroleum products and were availing of the benefit of Cenvat credit of service tax paid on various input services. With effect from March 1, 2005, two of their final products, that is, LPG (domestic) and SKO (PDS) became exempt from duty and as such, the appellants were not entitled to avail of any Cenvat credit in respect of service tax paid on the input services. Accordingly, the appellant informed the Department by way of writing on April 8, 2005 that they will not be availing of any input service tax credit. However, with effect from April 12, 2005, the said two products, LPG and SKO were included in rule 6(3)(a) of the Cenvat Credit Rules, 2004. As a consequence, the appellants could avail of credit of the service tax paid o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit required to be reversed ought o have been taken on the basis of actual credit availed of during the relevant months and there is no warrant or justification to adopt any average quantum. He further clarifies that during some of the months, the credit so availed of was on the lower side whereas in some other months, it may be on the higher side. Similarly, the quantity of LPG cleared in the month of September 2005 stands wrongly taken in the said Table. The learned SDR, Shri S.R. Prasad appearing for the Revenue submits that the fact as to whether the credit was actually availed of or not in March and April, 2005 is required to be verified. Further, in respect of the conversion the formula adopted by the adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of the credit required to be reversed by the appellants. Their appeal is accordingly allowed by way of remand. Taking the Revenue's appeals, we find that there are three issues involved. The first issue relates to nitrogen manufactured by the assessee and used captively for further production. The use of such nitrogen is for degassing wagon through which final product LPG is cleared or flourishing pipelines through which nitrogen moves. The entire use of nitrogen is in the factory of production and as such, can be safely held as used in the manufacture of final product. We further note that prior to March, 2005, the final product was being cleared on payment of duty, in which case, emergence of intermediate products which m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and clearance of the same would not call for any reversal. The Revenue has challenged the above finding of the Commissioner on two grounds: (i) sulphur cannot be considered by-product and (ii) the clearance of an exempted by-product also invites reversal. In respect of the first issue, it is the assessee's case that sulphur is admittedly a by-product as held by the Department vide various orders passed in the assessee's own case which have attained finality having not been challenged by the Revenue. As such, it stands decided that they cannot take a different stand in the subsequent proceedings. In any case, our attention has been drawn to the relevant tariff entry which describes the product as a by-product. We find that chap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision settled the issue. In view of the fact that the larger Bench decision, which is against the assessee stands stayed by the honourable Bombay High Court and the matter is pending decision, we remand the said issue to the original adjudicating authority for fresh decision after declaration of the law by the honourable Bombay High Court. The appellant's reliance on the Supreme Court decision in the case of GAIL would also be considered by the adjudicating authority. The next issue involved in the Revenue's appeals is reversal of input stage credit availed of in respect of input used in the manufacture of fuel, which fuel is further used in the manufacture of electricity and which electricity is further used in the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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