Tribunal Rules Blending Duty Paid Motor Spirit Not Manufacture

The Tribunal allowed the early hearing application for an appeal involving duty above Rs. 1 crore. The main issue was whether blending duty paid branded motor spirit with multifunction additives constituted "manufacture" under the Central Excise Act. Relying on precedent, the Tribunal held that such blending did not amount to manufacture, as it did not fundamentally alter the nature of the product. Following the decision in a previous case, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant on 09/02/2018.

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Issues:
1. Early hearing application for appeal involving duty above Rs. 1 crore.
2. Whether blending of duty paid branded motor spirit with multifunction additives amounts to manufacture under Section 2(f) of the Central Excise Act, 1944.

Issue 1: Early Hearing Application
The appellant filed a miscellaneous application for early hearing of the appeal due to the duty involved being above Rs. 1 crore and the issue being decided in their favor. The application was allowed, and with the consent of both parties, the appeal itself was taken up for disposal.

Issue 2: Blending of Motor Spirit with Additives
The appeal was against an Order-in-Original regarding the blending of duty paid branded motor spirit with multifunction additives at a refinery. The question was whether this blending constituted "manufacture" under Section 2(f) of the Central Excise Act, 1944. The appellant relied on a previous decision in the case of Bharat Petroleum Corporation Ltd. vs. CCE, where it was held that such activity does not amount to manufacture.

In the cited case of Hindustan Petroleum Corporation Ltd. and others v. CCE, Delhi and Rohtak, the Tribunal had ruled that blending ordinary motor spirit with small quantities of multifunction additives to create branded motor spirit did not amount to manufacture. The blended product retained the same characteristics and specifications as the original motor spirit, enhancing its quality without fundamentally altering its nature. The Tribunal concluded that such processes aimed at enhancing marketability or value addition did not constitute manufacture and, therefore, were not subject to Central Excise Duty.

The present Tribunal, following the precedent set in the BPCL case, set aside the impugned order and allowed the appeal in favor of the appellant. The decision was pronounced and dictated in Open Court on 09/02/2018.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's reasoning in reaching its decision.

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