Intermediate goods cleared for job work qualify under Rule 4(5)(a), and suppression is required for the extended period to apply.

Residual fuel gas sent to a job worker for conversion into electricity and steam, and returned for use in manufacture, was held eligible for clearance without payment of duty under Rule 4(5)(a) of the Cenvat Credit Rules, 2004. The Tribunal treated the issue as covered by its earlier ruling on a similar intermediate product arising from cracking naphtha and found no material distinction that would change the legal position, so the duty demand failed on merits. On limitation, the extended period was unavailable because the department had been informed of the clearances and there was no suppression of material facts. Interest and penalty therefore did not survive.

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Issues: (i) Whether residual fuel gas cleared to a job worker for conversion into electricity and steam and returned for use in manufacture was eligible for clearance without payment of duty under Rule 4(5)(a) of the Cenvat Credit Rules, 2004. (ii) Whether the extended period of limitation could be invoked for the duty demand.

Issue (i): Whether residual fuel gas cleared to a job worker for conversion into electricity and steam and returned for use in manufacture was eligible for clearance without payment of duty under Rule 4(5)(a) of the Cenvat Credit Rules, 2004.

Analysis: The Tribunal treated the controversy as covered by its earlier decision in the assessee's own case concerning another intermediate product cleared for the same purpose under Rule 4(5)(a). It held that the material distinction between the earlier product and residual fuel gas did not alter the legal position, since both arose from cracking naphtha and were sent for generation of electricity and steam for return and use in the manufacture of final products. The Tribunal also relied on a later decision applying the same principle to intermediate goods cleared for job work.

Conclusion: The clearance was held to be permissible under Rule 4(5)(a), and the demand on merits failed.

Issue (ii): Whether the extended period of limitation could be invoked for the duty demand.

Analysis: The Tribunal noted that the department had been informed through communications regarding the clearance of the intermediate product for job work. In the absence of suppression of material facts, the foundation for invoking the extended period was not available.

Conclusion: The extended period of limitation was held to be inapplicable.

Final Conclusion: The duty demand, interest, and penalty did not survive, and the assessee obtained relief on both merits and limitation.

Ratio Decidendi: An intermediate product may be cleared for job work under Rule 4(5)(a) where it is sent for processing and the resultant utility is returned for use in manufacturing, and the extended period cannot be invoked absent suppression of material facts.

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