Inclusive tariff definition of power alcohol sustained excise liability on ethyl alcohol despite later denaturing and use.

Ethyl alcohol of 99.5% grade denatured with special denaturants was treated as falling within the tariff expression "power alcohol" in entry 6(ii) of the First Schedule to the Central Excises and Salt Act, 1944. The expression "power alcohol, that is to say, ethyl alcohol of any grade" was read as an inclusive definition, and the product qualified on that basis without relying on the Indian Power Alcohol Act, 1948. Rules 11 and 12 of the Indian Power Alcohol Rules, 1948 were regarded as governing clearance and use, not as conditions precedent to classification. Excise duty attached on manufacture, and later denaturing or use in another product did not remove the liability.

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Issues: Whether ethyl alcohol of 99.5% grade, denatured with special denaturants, fell within entry 6(ii) of the First Schedule to the Central Excises and Salt Act, 1944 as power alcohol and was liable to excise duty.

Analysis: The expression in entry 6(ii), "power alcohol, that is to say, ethyl alcohol of any grade", was construed as an inclusive definition fixing the sense in which the tariff entry used the term. The Court held that the petitioner's product, being ethyl alcohol of the relevant grade, answered that description even apart from the definition in the Indian Power Alcohol Act, 1948. The requirements in Rules 11 and 12 of the Indian Power Alcohol Rules, 1948 were treated as conditions governing clearance and use, not as conditions precedent to the commodity being power alcohol. The Court further held that excise duty attached on manufacture, and the later denaturing or use of the alcohol in producing another marketable product did not displace the liability that had already arisen.

Conclusion: The product was held to be power alcohol within entry 6(ii) and liable to excise duty; the objection to assessment failed.

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