I don't recall. I think it was something that got hardcoded when the 300% prod cap was designed originally (or shortly there-after). The system was designed to specifically target recipe-loops, (scenarios where the result of a recipe could be used in another recipe to return its original ingredients, aka barreling), and any "lossless" recipe like this would be detected and specifically excluded from productivity as a means to prevent infinite free-resource production.
come to think of it: i think another 'consequence' of the thing was that it shouldn't be possible [anymore] to use prod modules within a recycler except for [scrap processing], at least, that should still be the case. argument being: with +300% prod on, say, processing units...if a player were allowed to use prod modules in a recycler and feed it the blue circuits, that would create a positive-feedback loop. so .... the scenarios (loopholes) like these were all closed by implementing the anti-feedback system (not sure what the devs actually call it)