2020 (9) TMI 222 - AT - Central Excise

Tribunal exempts appellant from duty under Central Excise Act for Ethanol Blended Petrol

The Tribunal allowed the appeal, determining that the appellant qualified for exemption under Notification No. 28/2002-CE for Ethanol Blended Petrol (EBP) ... Benefit of exemption under N/N. 28/2002-CE - Ethanol Blended Petrol (EBP) (Gasohol) - Allegation that the appellant had not complied with the condition of said notifications inasmuch as the EBP did not satisfy the Bureau of Indian Standard’s (BIS) specification 2796:2000 - requirement of deposit of duty under Section 11D of the Central Excise Act, 1944. Revenue’s main contention is that to be eligible for exemption under aforesaid Notifications, inter alia, it is required to show that EBP conforms the BIS 2796:2000 standards. It is their allegation that the Appellant failed to establish that the EBP cleared by them from their Vashi Terminal conforms the BIS specification - appellants, on the other hand, claimed that the tests carried out on the samples of EBP at their Vashi Terminal even though limited to nine out of fifteen tests, but indicate that the EBP confirms to the BIS 2796:2000 specification. They submitted the sample Test Reports conducted at Vashi Terminal to the department. HELD THAT:- There are no merit in the reasoning advanced by the learned Commissioner in rejecting the test reports. The appellant while clearing the EBP from their Vashi Terminal invariably conducted tests on the EBP samples to ascertain its quality and the specification of the product before clearance. Needless to mention the said product is subjected to strict control and orders issued by Central and State Government from time to time viz. Motor Spirit and High Speed Diesel(Regulation of Supply & Distribution and Prevention of Malpractices) Order,1998, where under the quality and specification of the MS to be strictly complied. It is found that at the Vashi Terminal where the duty paid MS and Ethanol were received, and after blending the same, EBP emerges, the Appellant carry out tests, albeit nine out of fifteen tests, which indicated that it conforms the BIS 2796:2000 specification and the control Order, 1998; and accordingly cleared/sold to their customers like other Refineries /terminals did. Later on being disputed by the department about the correctness of the test reports of EBP at Vashi Terminal as all the tests were not carried out on the samples, they subjected the samples tested at their Refinery and produced test certificates dated 1.6.2004 and 5.6.2004, which conform BIS specification 2796:2000 - the test reports on EBP at Vashi Terminal cannot be brushed aside unless contrary test result is produced by the Revenue. The said test results further confirmed when got tested at their equipped to test all parameters. Applicability of Section 11D to the facts of the present case - HELD THAT:- The Vashi terminal receives duty paid Motor spirit from their Refinery and also duty paid ethanol, which was blended in the ratio of 95:5 at the time of clearance from the Vashi unit to the customers in tankers. The price per KL of EBP was similar to the price charged by the appellant for unblended motor spirit to the customers - In the present case, the Revenue could not show that the appellant after blending ethanol with duty paid motor spirit collected separately, mentioning the duty on ethanol in the invoices, but not paid to the Government. Therefore, Section 11D of CEA, 1944 cannot be said to have been attracted. The Revenue has vehemently argued that the issue is covered by the judgment of this Tribunal in the appellant’s own case reported as IOCL Vs. Commissioner of Customs, Vadodara [2010 (10) TMI 399 - CESTAT, AHMEDABAD] - Analyzing the facts and the question of law involved in the said case, we find that there is no similarity between the said case and the appeal before us. Appeal allowed - decided in favor of appellant. Issues Involved:1. Eligibility for exemption under Notification No. 28/2002-CE for clearance of Ethanol Blended Petrol (EBP) from Vashi Terminal.2. Requirement to deposit duty under Section 11D of the Central Excise Act, 1944.Detailed Analysis:Issue 1: Eligibility for Exemption under Notification No. 28/2002-CEThe appellant, a registered entity with the Central Excise Department, cleared Ethanol Blended Petrol (EBP) at a concessional rate of duty. The EBP consisted of 95% Motor Spirit (MS) and 5% ethanol by volume. The appellant claimed exemptions under various notifications, including Notification No. 28/2002 dated 13.5.2002, amended by subsequent notifications. The primary contention was whether the EBP conformed to Bureau of Indian Standards (BIS) specification 2796:2000, a prerequisite for availing the exemption.The appellant argued that the blending of ethanol with motor spirit was a simple process conducted during transit in tankers/trucks without mechanical or electrical appliances. They submitted test reports from their Vashi Terminal and later from their Mumbai Refinery, indicating that the EBP conformed to BIS specifications. Despite this, the Commissioner rejected these reports, deeming them an afterthought and lacking evidentiary value.The Tribunal found merit in the appellant's argument, noting that the appellant, a Public Sector Undertaking, conducted tests on EBP samples to ensure quality and compliance with BIS specifications. The Tribunal emphasized that the appellant's test reports should be accepted unless contrary evidence is provided by the Revenue. The Tribunal concluded that the appellant complied with the exemption notification conditions, confirming that the EBP conformed to BIS specification 2796:2000.Issue 2: Requirement to Deposit Duty under Section 11D of the Central Excise Act, 1944Section 11D mandates that any person who collects an amount representing duty of excise in excess of the duty assessed must deposit the excess amount with the Central Government. The Revenue alleged that the appellant collected duty from customers but did not deposit it with the government.The appellant contended that the invoices issued from the Vashi Terminal indicated a composite cum-duty price without showing the duty element separately. Therefore, Section 11D was not applicable. The Tribunal supported this view, referencing previous judgments that held Section 11D applies only when an amount is collected explicitly as representing duty of excise.The Tribunal distinguished the present case from a previous judgment involving Indian Oil Corporation Ltd. (IOCL), where the duty element was shown separately in invoices. In the current case, the composite price included duty, and no separate duty on ethanol was collected or shown in the invoices. Consequently, Section 11D was not applicable.Conclusion:The Tribunal set aside the impugned order, allowing the appeal with consequential relief as per law. The Tribunal confirmed that the appellant was entitled to the exemption under Notification No. 28/2002-CE and was not required to deposit duty under Section 11D of the Central Excise Act, 1944.