Captive consumption exemption remains available when attributable Cenvat credit is reversed under Rule 6

Exemption under Notification No. 67/95-C.E. was considered applicable to fuel oil and lean gas captively consumed in a refinery for generating electricity used in manufacturing petroleum products. The reasoning was that the benefit cannot be denied merely because the goods are captively consumed where no credit was availed on the inputs in question and the attributable Cenvat credit on input services was reversed under Rule 6 of the Cenvat Credit Rules, 2004. The view was treated as settled and supported by earlier decisions and a departmental circular, so the exemption remained available and the Revenue challenge failed.

---

---

Issues: Whether the respondent was entitled to exemption under Notification No. 67/95-C.E. for fuel oil and lean gas captively consumed in the refinery for generation of electricity used in the manufacture of petroleum products, and whether reversal of the attributable Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 protected the exemption.

Analysis: The issue was treated as settled and not res integra. The respondent had not availed credit on the inputs in question and had reversed the credit attributable to input services used in relation to the manufacture of the impugned goods. In such circumstances, the benefit of the exemption notification could not be denied merely because the goods were captively consumed. The view was supported by earlier decisions and the departmental circular clarifying the position.

Conclusion: The respondent was entitled to the benefit of the exemption notification, and denial of the exemption was not justified.

Final Conclusion: The Revenue's challenge failed and the order allowing the respondent's claim was sustained.

Ratio Decidendi: Where the attributable Cenvat credit on inputs or input services has been reversed or paid back, exemption for goods captively consumed cannot be denied under Notification No. 67/95-C.E.

---