Exemption for ethanol-blended petrol cannot be denied merely because duty payment on a component followed mixing within the prescribed time.

Exemption for 5% ethanol blended petrol was available where the motor spirit component was duty-paid within the time allowed under Rule 8 of the Central Excise Rules, 2002. The notification applied to the final blended product, and denial of benefit could not rest solely on the technical ground that the motor spirit had been mixed before duty payment, so long as the duty was discharged within the prescribed period. The rule was treated as satisfied once payment was made by the specified date, making refusal of the exemption on the Revenue's objection unwarranted.

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Issues: Whether exemption under the notification for 5% ethanol blended petrol could be denied on the ground that duty on the motor spirit component had not been paid before mixing, despite payment within the period prescribed under the payment rule.

Analysis: The exemption applied to the final product, namely 5% ethanol blended petrol, consisting of 95% motor spirit and 5% ethanol, both of which were required to be duty-paid. The motor spirit and ethanol were stored in the refinery premises and the duty on motor spirit was paid within the time permitted under Rule 8 of the Central Excise Rules, 2002. Once the duty liability stood discharged by payment within the prescribed time, denial of the exemption on the technical ground that payment had not preceded the mixing was unwarranted. The decision relied on the earlier co-ordinate bench view that duty paid by the specified date satisfies the rule.

Conclusion: The exemption could not be denied on the ground urged by the Revenue, and the assessee was entitled to the benefit of the notification.

Ratio Decidendi: Where the statutory payment rule treats duty as duly discharged upon payment by the specified date, an exemption on the final blended product cannot be refused merely because one component was mixed before such payment, if the duty on that component was in fact paid within the prescribed time.

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