In a major relief to Reliance Industries, the Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) allows refund of the amount in respect of LPG cleared under Public Distribution System (PDS) exemption.
The respondents, Reliance Industries Limited are engaged in the manufacture of dutiable goods viz. MS, HSD, ATF, LPG, and exempted goods viz SKO for PDS and LPG, etc therefore, it is admitted fact that LPG is a final product hence the stand taken now that the LPG is a byproduct is not tenable.
It has been submitted that Provision of Rule 6 (2) applies only where a manufacturer manufactures a final product that is chargeable to duty and another which is exempt from payment of duty. In the instant case, the LPG is dutiable, except when cleared to PSU oil marketing companies for distribution under PDS. This being the case, the requirement of Rule 6 (2) of there being a final product that is dutiable and another which is exempted is not satisfied.
The coram of Judicial Member, Ramesh Nair, and Technical Member Raju held that during the process of refining crude oil LPG namely propane and Butane also emerged at an intermediate stage. The LPG is liable to excise duty as per the Central Excise Tariff at the rate of 8% however, the same LPG if it is clear to PSU oil Companies for further supply to the domestic consumers under PDS, is exempted.
The respondents have used input and input services in the manufacture of dutiable goods i.e. motor spirit (MS), High-Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil, etc. the LPG is generated as one of the products which also dutiable but under the said scheme of the Government i.e. PDS when it is decided to clear dutiable LPG under the PDS there is an exemption on excise duty.
“We are of the view that respondents are not required to pay any amount under Rule 6(3) in respect of LPG cleared under an exemption under PDS. Therefore, the amount paid by the respondent was liable to be refunded to them,” the CESTAT said.
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