TMI Blog2021 (10) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... phtha, Fuel oil etc are the products only for the manufacture of the same entire input and input services are used therefore it cannot be said that any input or input service is used right from the beginning of the process in the manufacture of exclusively exempted goods therefore, Rule 6 (1) is not applicable. Consequently rule 6 (2) is also not applicable. The LPG generated during the course of manufacture of motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. is dutiable right from the stage of receipt of input and input services till the completion of manufacture of LPG. Therefore, during that stage availment of Cenvat Credit is absolutely in conformation to Cenvat Credit Rules, 2004. In the process or refining crude oil to obtain value added finished goods namely motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. the LPG inevitably arises and tapped from the crude distillation unit, coker unit, fluid catalytic cracking unit (FCCU), platformer unit etc. in these process it is not as if respondent had set out to manufacture LPG. The same arises in the refining process and that the same could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of ethane and methane was inevitable. It was also held that since the identical quantity of ethylene and propylene was used in the manufacture of ethane and methane, it cannot be said that benefit of exemption was not available. Since the respondent would not have manufactured the dutiable goods by using lesser quantity of Input and input services the entire cenvatable Input and Input service were used for manufacture of dutiable finished goods therefore, the requirement of Rule 6 (2) stood satisfied as the entire credit was attributed to the manufacturer of the finished dutiable goods only - In the present case on date of availing credit on input and input services, there was no basis for presuming that any part of the same will be used in the manufacture of any exempted goods for the reason that at that time LPG was dutiable good only after the receipt Input and Input services and availment of credit, even upto manufacture of LPG it is not known that LPG is exempted goods, it is only at the time of clearance of goods on end use basis under PDS it is cleared under exemption. The objective of CBEC Manual of Supplementary Instruction at Para 3.7 of Chapter 5 is that once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idy Scheme End Use exemption duty is claimed. There is no prohibition in Cenvat Credit Rules, 2004 restricting availment of cenvat credit on input and input services when exemption is claimed under End Use notification at the time of removal of goods. The prohibition is only for the availment of credit both for input and input services for manufacture of exempted goods. iii) When on input and input services credit are availed for excisable goods as in the case of LPG there is no restriction in Cenvat Credit Rules, 2004 for utilizing the credit thus availed. iv) In view of the above, they are not required to reverse the input and input services credit under Rule 6(3), 2004 for removing LPG under End use exemption notification to PSU oil companies under Domestic LPG Subsidy Scheme. v) For the above ground the respondents has taken support of following judgments: CCE Madurai Vs DCW Ltd -2009 (234) ELT 163 (Tri.- Chennai) Indian Oil Corporation Ltd Vs CCE Mumbai-II 2009-TIOL-1702-CESTAT-MUM Hindustan Zinc Limited vs UOI- 2008(223) ELT 149 (RAJ) In reference to the aforesaid refund claim of the respondent the Assistant Commissioner of Excise and Service Tax(G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent provision of rule 6 (3A).He submits that there is no escape from this mandatory provision. He submits that the respondent has voluntarily opted for not to maintain separate account. Accordingly, they reversed the amount of cenvat credit in terms of rule 6(3) (ii) since may 2009. The refund claim were made by the respondent in respect of cenvat credit reversed/paid under Rule 6(3) of the CCR,2004 for the period from April 2016 to March 2017 on removal of LPG under Domestic LPG Scheme on inputs a well as input services is not maintainable. 2.1 He submits that the appellate authority has wrongly held that to apply of Rule 6(2) and Rule 6(3) of Cenvat Credit Rules, 2004, there should be two different final products, one which is cleared on payment of Central Excise Duty and another cleared without payment of duty. This finding is totally incorrect and legally fallacious. For the operation of Rule 6, there is no requirement that the assessee should be manufacturing two different sets of products one dutiable and one exempted as observed by the Appellate authority. Rule 6 comes into picture once the goods are cleared under any exemption notification issued under section 5A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case were entirely different from the facts of the present case. He submits that rule 57 ibid, had no provision which required reversal of modvat credit, taken in respect of the duty paid on the declared inputs which were to be, utilized in manufacturing of declared dutiable finished products and for by products generated during manufacture of final product. Whereas in the present case the LPG manufactured for supply to household domestic consumers under domestic LPG Subsidy Scheme is the final product and not a byproduct. There is no specific provision under Cenvat Credit Rules, 2004 which is similar to Rule 57 D of the erstwhile modvat credit scheme. The respondents are well aware of the quantum of cenvat credit on inputs and input services used in or in relation of LPG used for domestic purpose and accordingly reversed the same periodically as per the said rules. The appellate authority has grossly erred in allowing refund to the respondents by wrongly relying upon the judgment of Hindustan Zinc Limited as the facts and circumstances of the present case are completely different. 2.4 He submits that in the present case the product manufactured by the respondent i.e. LPG is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f LPG (Domestic) cleared without payment of duty under Rule 6(3)(ii). In view of the provision of Rule 2(d) and rule 6(3) of the Cenvat Credit Rules, 2004, the respondents were required to reverse/pay an amount equal to the cenvat credit availed on the inputs and inputs services used in or in relation to manufacture of LPG (Domestic). Therefore, no merit in the refund claim filed by the respondents. He submits that in view of the above facts and statutory provisions the order in appeal passed by the Commissioner (Appeals) is not correct and proper hence liable to be set aside. 2.9 In his written submission dated 09.08.2021 as regard liberty the additional submission filed by the respondent, he submits that the respondents have taken ground that LPG is by product therefore Rule 6 is inapplicable cannot be accepted for the reason that this ground was taken first time at this appellate stage and the same was never taken before the adjudicating authority. He also referred to the earlier proceedings with reference to quantification of amount for reversal under rule 6 (3A) of CCR, 2004 whereby he submits that in the said case it is the respondent company who stated that they are engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The LPG necessarily arises and tapped from the crude distillation unit, coker unit, Fluid Catalytic Cracking Unit, Platformer Unit etc. It is relevant to note here that, it is not as if the respondent had set out to manufacture LPG. The same necessarily arises in the refining process and that the respondent could not have limited or curtailed the production of LPG nor could have manufactured other value added products using a lesser quantity of inputs and input services. 3.2 He submits that since the entire quantity of inputs and inputs services was required for manufacture of dutiable finished goods and that LPG emerges inevitably and unavoidably without any deliberate attempt to manufacture it, the mandate of rule 6(1) was not at all violated in any manner. He submits that the issue is no longer res- integra and has been decided by the Hon ble Gujarat High Court in the Case of CCE vs. Sterling Gelatin 2011(270) ELT 200 (Tri.Guj) . He submits that the facts of the respondents case are similar to that of Sterling Gelatin. Even in the case of respondent the LPG emerges without any deliberate attempt to manufacture it however by using lesser quantity of input and input servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the factory of the manufacturer and not determine basis on the date of finished product. In the present case also the entitlement of credit on the date it received the input and input services and not on date when finished goods are cleared on payment of duty therefore the requirement of maintenance of separate account has to be complied with or otherwise at the threshold when the goods are received and not at the later date. 3.6 In the facts of the present case the exemption available to LPG is the conditional one subject to the same being supplied by PSUs for domestic household consumption under the PDS Scheme. There is no basis available to the respondent to determine on the date of availing Cenvat credit whether the said Input and Input services in relation to being used in the manufacture of dutiable finished goods would also be used in manufacture of exempted goods. In the context of such exemption which was conditional and contingent upon customer demonstrating compliance with a precondition it was held that the requirement of maintaining separate account under sub rule 2 of Rule 6 has been satisfied. Placing reliance on this tribunal judgment in the case of Goyal P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U Motors Pvt Ltd vs CCE reported in 2017- TIOL-3087-CESTAT-Mum and Tanfac Industries Ltd 2010 (262) ELT 1123 (T). 3.9 He also placed reliance in the case of Sobha Developers Ltd vs. CCE-2012 (276) ELT 214 (T) which was affirmed by Hon ble Karnataka High Court is applicable in the present case. The Hon ble tribunal held that demand under Rule 6 of the CCR is not applicable when services are provided availing conditional exemption under Notification No. 4/2004-S.T dated 31.03.2004 read with Rule 25 of SEZ Act, 2005. 3.10 Without prejudice to the above submission, the respondent submits that the CBEC Manual of Supplementary Instruction at Para 3.7 of Chapter 5 in the context of waste scrap , byproducts and intermediate products generated in the process of manufacture, has held that no reversal of credit on input and input services is required in such situations. The respondent submits that neither the CCR nor the Supplementary Instructions Manual clarify as to what constitute a By product . In this regard he placed reliance on the larger bench judgment of Hon ble CESTAT in the case of Manufacturers Association of India vs. Designated Authority, DGAD, MOF reported in 2016 (342 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of manufacturer of dutiable and exempted goods and provider of taxable and exempted services which was substituted as Obligation of a manufacturer of dutiable or producer of final products . 3.13 The respondent submits that the 2011 amendment of Rule 6 which the learned DR relied upon in fact furthers the respondent s case. He submits that the respondent submissions urged by placing reliance on the judgment of this tribunal in the case of DCW LTD (Supra) which followed in several decision of Hon ble tribunal. The provision of rule 6 (3) applies only when the manufacturer manufactures two different kind of product one which is chargeable to duty and another product which is exempted. The 2011 amendment has substituted the words Obligation of manufacturer of dutiable and exempted goods with Obligation of manufacture of Final Products which clearly provides that post 2011 there remains no doubt that there has to be two different final product one excisable and another exempted and not applicable in the case of homogeneous excisable goods which is dutiable as also can be cleared under an exemption notification. He submits that as regard the learned AR s reliance among th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Kesar Enterprises Ltd 2001 (130) ELT 93 (T) the facts were totally different as the assessee was manufacturing two different product viz IMFL which was non excisable and Rectified Spirits which are excisable products but cleared at nil rate of duty. The judgment of Amrit Paper 2006 (200) ELT 365 (SC) followed thereafter in the case of Andhra Pradesh Paper Mills Ltd 2015-TIOL -107- CX is inapplicable. The facts of the present case as a issue being not similar to the case on hand the judgment cannot be relied upon. Similarly in the case Bazpur Cooperative Sugar factory Ltd - 2015 (316) ELT 72- (Uttrakhand) the facts in that case is different from the fact of the present case and the assessee did not argue that Rule 6(2) to apply there has to be more than one final product of which one is exempted. The judgment in the case of Paharpur Cooling Tower Ltd- 2012 (279) ELT 110(T) is not applicable to the facts of the present case. 3.16 He further submits that all other judgment relied upon by the Learned AR, the facts in those cases are not similar to the facts in the present facts therefore ratios of those judgments are not applicable. In view of the above argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services- (i) in or in relation to the manufacture of exempted goods and their clearance up to the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance upto the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b).] To examine their issue it is necessary to analyze the relevant legal provision of Cenvat Credit Rules. The Rule 2 (K) (l) is reproduced below:- [(k) input means- (i) all goods used in the factory by the manufacturer of the final product;or [(l) input service means any service,- (i) used by a provider of taxable service for providing an output service;or (ii) used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o manufacture dutiable goods i.e. motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc even LPG therefore, at the time of taking Cenvat Credit the input and input services are used in the manufacture of excisable dutiable products therefore, the availment of Cenvat Credit at the time of receipt of input and use thereof is absolutely in terms of provisions of CCR. The respondents submission as far as that even if LPG is not generated in course of manufacture there cannot be any reduction in the quantum of use of input and input service for manufacture of motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc therefore, the quantum of input and input services was used in the manufacture of motor spirit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. will remain same irrespective of the facts whether the LPG is generated or otherwise. Therefore, it cannot be said that any part of input and input services are not used for manufacture of dutiable product i.e. motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. 4.5 The LPG generated dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,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 charged to acidulation vats with the help of conveyors. Each vat is filled with pre-determined quantity of bone chips and then soaked with Hydrochloric Acid. The bones contain mineral matter like Phosphate Salts. The Hydrochloric Acid leaches out the phosphates forming Mono Calcium Phosphate. The phosphate solution commonly known as Mother Liquor is pumped out of the acidulation vats into precipitation tanks where lime solution is added which reacts with Mono Calcium Phosphate converting it into Di- Calcium Phosphate. Insofar as manufacture of Gelatin is concerned, after removal of Mother Liquor the demineralised bones are hydraulically transported to the washing section and thereafter processed further to manufacture Gelatin. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for the purpose of manufacturing Di-Calcium Phosphate, there would be no question of maintaining separate accounts for receipt, consumption and inventory of input. . 10 . In the facts of the present case, it is not as if by using a smaller quantity of input Hydrochloric Acid, the respondent could have averted the emergence of Mother Liquor. In other words, in the technology utilized by the respondent for the manufacture of Gelatin, the emergence of Mother Liquor was inevitable. Hence, while it is no doubt correct to say that Hydrochloric Acid has been used in or in relation to manufacture of Mother Liquor, the identical quantity of the same goods has simultaneously been used in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such quantity of input and input services to be denied which is not used in the manufacture dutiable goods but in the present case there is no dispute that the entire quantity of input and input services has been used for manufacture of dutiable goods therefore even though the LPG arising in the course of manufacture only because of that it cannot be said that there is reduction in the quantity of input and input services used in the manufacture dutiable goods. 4.7 The similar issue has been considered by Hon ble Supreme Court in the case of National Organic Chemical Industries Limited-2008 (232) ELT 193 (S.C), in that case exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opylene 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 by-products 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 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, therefore, cannot be a ground to deny the benefit of exemption to the respondent. 31 . In our considered view, no interference is called for in the wellreasoned judgment/order of the Tribunal. The appeal being devoid of any merit is accordingly dismissed. However, in view of the facts circumstances of the case, the parties are directed to bear their own costs. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the recovery of DMT and exempt from payment of duty under Central Excise Notification dated 19-5-1976. The appellants were further directed to furnish the exact percentage of ethylene glycol content used/consumed in the methanol, the ethylene glycol residual waste and polyester fibre waste; and that not to utilize the proforma credit or set-off credit till the data was furnished and the same was authenticated by the Chemical Engineer. The classification list submitted by the appellants was modified in terms of the said letter. 5 . Hence, it is the case of the appellants that from 11-4-1981 even though some part of the input may be contained in any waste, refuge or by-product which is chargeable to nil rate of duty, the credit of the duty paid on the inputs could not be denied. By this order the set-off of duty in respect of duty paid ethylene glycol was allowed from 11-4-1981 onwards except in the case of ethylene glycol used/consumed in polyester waste used for recovery of DMT on the ground that this polyester waste was chargeable to nil rate of duty. Similarly, duty paid on ethylene glycol which was used for recovery of DMT was held not to be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s excisable goods and not in respect of methanol which arises as a by-product as a part and parcel of chemical reaction. It appears further on a comparison of the Rule 56A and the Notifn. No. 201/79 that these deal with the identical situation. . 22 . In our opinion , the same analogy and reasoning would apply when the methanol arises as a result of chemical reaction and not as a result of any by-product. In the instant case, the methanol was nonexcisable. Just because methanol arises as a part and parcel of the chemical reaction during the process of manufacture, it cannot be said that methanol was not used in the manufacture of polyester fibre. The intention of the Government is evident furthermore, from the trade notice of Pune Collectorate No. 31/81. The Tribunal, therefore, should have taken into consideration the trade notice for interpretation of exemption Notifn. No. 201/79, which was para materia with Rule 56A. From the above judgments it is settled that any particular process of manufacture of dutiable goods any exempted goods which are inevitable emerges it cannot be said that out of the total input and input services use in the manufacture is wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was engaged to use, the provision of Rule 57CC were the zinc and lead and sulphuric acid and other commodities. Presently we are not concerned with as on the date the inputs received the sulphuric acid the final product with which we are concerned was chargeable to duty at the rate of 15%. The manufacturer had not been exempted from payment of duty on his end product nor the duty prescribed in the sulphuric acid under the tariff was nil nor there was unconditional exemption to the manufacturer on payment of duty at Nil rate on any condition to be fulfilled by him. We have already noticed above that General Exemption No. 66 which prescribed nil rate of sulphuric acid used in manufacture of fertilizers. It did not provide nil rate of duty on production or manufacture of Sulphuric Acid as such. Therefore, the end product sulphuric acid was not subjected to exemption. If Rule 57CC is read closely, the exemption or nil rate must be related to the end product of the manufacturer. It does not speak of the nil rate or exemption from payment of duty on user of the commodity produced by the subsequent manufacturer using the same as his raw material or inputs. Obviously where the nil rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not affect the entitlement that legally arises long before that date. From the above judgment it is settled that cenvat credit validly availed at the time of receipt of input and input services. This view is further supported by the following judgments: CCE vs Goyal Proteins Ltd 2015 (325) ELT 165 (Tri. Del) SRF Ltd vs. CC 2015 (318) ELT 607 (SC) Dai Ichi karkaria- 1999 (112) ELT 353 (SC) CCE vs. Premier Tyres LTd 2001 (130) ELT 417 (Ker) HMT vs. CCE 2008 (232) ELT 2017 (tri.LB) In view of the above judgment when at the time of taking credit it was validly taken no mechanism was provided to recover the same. 4.11 The similar circumstance in the case of Service tax matter this tribunal has considered in Almebic 2019 (28) GSTL 71 (Tri. Ahd) which was also upheld by the Hon ble Gujarat High Court reported at 2019 (29) GSTL 625.In that case the facts was service provider constructed residential building and availed the cenvat credit in respect of various input services at the time of commencement of construction of building as per the Finance Act, 1994. The building of residential complex is liable to service tax however; the service tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see manufacture the dutiable finished goods and in the process certain byproduct inevitably emerged. it was held that it was impossible for the assessee to maintain separate account and inventory of the Input and input services meant for dutiable final products and exempted final products as this can be done only if two different final products, one dutiable and the other exempted are being manufactured consciously. The tribunal held that when compliance of provisions is impossible, an assessee cannot be penalized for his failure to comply with the same. 4.13 In the case of SRF Ltd -2015 (318) ELT 607 (SC) the Hon ble supreme court held that the benefit of exemption cannot be denied if its conditions are impossible to be satisfied. In view of the above judgment in the present case also since there is no use of input and input services particularly for manufacturer of LPG whereas the Input ad Input services primarily used for manufacture of dutiable products it is impossible to maintain separate account in terms of Rule 6(2) of Cenvat Credit Rules, 2004. 4.14 The respondents without prejudice also submitted that the provision of Rule 6(2) applies only where the manufacturer ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the aforesaid decision of DCW which was affirmed by Hon ble Madras High Court has been followed in several decisions of this tribunal including that of SU Motors Pvt Ltd 2017- TIOL- 3087- CESTAT-MUM and CCE vs. Tanfac Industries and Greaves Ltd. The relevant order of Tanfac Industries and Greaves Ltd is as follows: In view of the above decision, particularly dealing with Notification no 10/97-CE it was conclusively held that Rule 6(3) shall be applicable only when manufacturer of the goods manufacture goods of two types, one is excisable and another is exempted. However, in case where goods manufactured are dutiable at the time of manufacture, Rule 6(3) will not be applicable . As regards judgments relied upon by the Ld. A.R I observed that in none of the case law, the issue of exemption notification which is end use based exemption ws dealt with, therefore, ratio of the decisions relied upon by the learned AR are not applicable. As per my above discussion, impugned order is set aside, and appeal is allowed with consequential relied, if any, in accordance with law. 4.16 In the present case the LPG which emerges during the refining process is not per se the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... byproduct has been discussed and the issue that whether the by-product attracts Rule 6 or otherwise is a question of law which can be taken at any stage. Therefore, considering this issue being legal we consider the same. We find that the LPG emerged unavoidably during the course of manufacture of other dutiable goods therefore the same is nothing but by-product. In this regard we have examined the nature of LPG on the website energypedia.info gives the details on LPG as under: 1. How is LPG produced? LPG is a by-product of natural gas and oil extraction and crude oil refining. Around 60% of LPG stocks in the last years have been separated from raw gas and raw oil during the extraction of natural gas and from the earth, and remaining 40% have been a by-product when crude oil is refined. From the above detail of website energypedia.info it is clear that LPG is a by-product generated during the refining of crude oil. The appellant in their written submission gave a chart of various products including the LPG whereby it is reveals that generation of LPG in the course of manufacture comes to 0.64% in 2015-16 and 0.38% in 2016-17 of total assessable value of all the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lorine emerging during the process of manufacture of subject goods has Equal Economic Importance . In order to consider chlorine a joint product of the status equal to caustic soda we have to examine the guidelines as stipulated in Para 12 of Schedule -III of 1967 Rules. The said para reads as under : 12. Joint products - Where more than one product which is of equal economic importance arises from process, the cost up to the point of separation of products shall be apportioned to joint products on reasonable and equitable basis and shall be applied consistently. The basis on which such joint costs are apportioned to different products arising from the process shall be indicated in the cost records . 15 . We note that the term Equal Economic Importance has not been defined. The plain meaning of the same is that when more than one product emerge during the common manufacturing process, two or more those can be considered to have Equal Economic Importance if they give equal economic return or monetary benefit to the producer. In such situation these products can be considered as joint/co-products. As per Dictionary of Accounting by Jonathan Law - 2010 (Oxford Unive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mic Importance when compared to the subject goods. Further, fluctuation in chlorine price even substantially increase during certain times do not make chlorine as a product of equal importance for DI. 16 . We have perused the Cost Audit reports of units of some of the DI. Chlorine has been consistently treated as by-product and the Cost Accounting Standards applicable to such treatment have been applied. The realisation out of chlorine produced shows that the position of Equal Economic Importance cannot be given to chlorine in the Indian context. After careful consideration of all the submissions made by the parties it is evident that chlorine was not of Equal Economic Importance to the DI as compared to caustic soda and thus cannot be treated as joint product. As such, we find that treating chlorine as a by-product in the analysis and to arrive at a finding by the DA is justified. As such, the appeals filed challenging the finding of the DA and consequent Notifications are dismissed. 5.2 In view of the above judgment one of the aspect to be considered after holding the product as byproduct is principle of Equal economic Importance. in the present case as discusse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut and input services were used for manufacture of dutiable goods even if the small part of the byproduct is generated unavoidably. In the present case also the Input and Input services was used for manufacture of other dutiable goods i.e. MS, HSD,ATF, Naphtha, Fuel oil etc and the LPG emerged unavoidably. The Cenvat Credit cannot be reduced on the input and input services attributed to LPG. With this objective behind the Para 3.7 which is directly applicable in the present case, the respondent is not required to reverse cenvat credit in terms of Rule 6 of CCR on this ground. 5.5 As regard the various judgment relied upon by the Learned AR we are of the view that in all these judgments facts are different as compared to the facts of the present case. As regard the reliance of Learned AR in the case of Essar oil Limited (Supra) we find that very important argument that the LPG emerges in its refinery and there is no deliberate attempt to manufacture it and the reliance placed on Swadeshi Polytex Ltd and Strerling Gelatin was not advanced and the facts may not be similar in that case. It is settled law that decision is a authority only on the prepositions that it decides and not u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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