Order date – 26 September 2022

 Facts –

• The Appellant, Reliance Industries Ltd., are engaged in manufacture of excisable goods and had availed credit under CENVAT Credit Rules, 2004 on eligible ‘inputs’ used in the manufacture of excisable goods.
• The Appellant under the impression that ‘liquefied petroleum gas (LPG)’, exempted by notification no. 
• 4/2006-Central Excise Act, 1944 dated 1st March 2006 when cleared for use under the ‘public distribution system (PDS)’ were ‘exempted goods’, reversed such proportion and also excluded it for the computation prescribed in rule 6(3A) of CENVAT Credit Rules, 2004.
• Accordingly, the Appellant claimed refund of the reversal undertaken for Cenvat Credit.
• Order-in-appeal dated 13th July 2012 was passed holding that the appellant is ineligible for refund of amounts that had, inadvertently, been reversed in CENVAT credit account under rule 6(3A) of CENVAT Credit Rules, 2004 between April 2010 and March 2011.   

Issue – 

• Whether the assesse was required to pay an amount of 8%/10% of the value of exempted goods?

Order – 

• The authorities relied on the case of the Appellants own case wherein it was held that he 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 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.
• In this case, it was observed that, the principle stands established that rule 6 of CENVAT Credit Rules, 2004 is inoperable ab initio in such clearances. Accordingly, the appeal is allowed and the impugned order is set aside.