TaxTMI 
TaxTMI 
1998 (3) TMI 279
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....nufactured by them was not suitable for being used as fuel for spark ignition engines. He relied upon the Tribunal's decision in the case of Cellulose Products of India Ltd. v. Collector of Central Excise, Vadodara - 1996 (84) E.L.T. 154 (Tribunal). He also submitted that there was no suppression and the Department had written to them in the year 1987 on the subject and the Department was aware of their production of Ethyl Alcohol. They had replied to the communication from the Department on 20-11-1987 wherein they had submitted that the rectified spirit of 94.68% Ethyl Alcohol contained by vol. could not be used as fuel for spark ignition. The show cause notice was issued on 24-6-1992 and the demand had been raised for the period 1-4-1987 to 29-2-1989. The ld. appellate authority had not referred to these communications. 3. In reply, Shri R.S. Sangia, JDR reiterated the grounds taken by the adjudicating authority in confirming the demand and imposing penalty. 4. We have carefully considered the matter. We find that the matter is entirely covered by the Tribunal's decision in the case of Cellulose Products of India Ltd. v. CCE, Vadodara - 1996 (84) E.L.T. 154 (Tribu....
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....n engines. It was further observed that the governing factor of the definition is that the product of the manufacturing process undertaken by the petitioner would be suitable for running Internal Combustion Engines. It is only then that it could be covered by the definition of Motor Spirit. 22. We find that the Collector has placed reliance on the contents of the letter dated 4-5-1987 signed by Shri M.C. Fernandes of Indian Oil Corporation. The assertions to the contrary in the letters placed before him by the appellants have been rejected by him. Thus the statement in Shri J.R. Nanda's letter that Rectified spirit normally containing 5% water cannot be used for blending in petrol due to phase separation and allied problems and that 100% Ethanol (Ethyl alcohol) alone can be used as fuel in Spark ignition engines with major modifications in the present passenger car engines has been dismissed with the observation that this in no way helped the party. The question, in our view, is not whether only 100% Ethanol is the suitable product. We are not concerned with such a product but with rectified spirit which has a concentration of around 95% Ethyl Alcohol and about 5% water. Wh....
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....eparation which it was claimed by the appellants is a deterring factor is not insuperable. Considerable modification of engine and providing for separate feeding system for petrol and the alcohol in the motor vehicle so that the two mix only in the engine are required. These bring not clearly that the use of the product in question for the intended purpose is ruled out for the purpose of Tariff Classification. 23. This position is consistent with the stand of the Government as seen from the 1989 Budget Instructions and the Circular 55/89, dated 18-9-1989 of the Central Board of Excise and Customs. These are extracted below :- Budget Instructions dated 28-2-1989 "There have been some disputes regarding the scope of Heading 2204 covering ethyl alcohol suitable for use in spark ignition engines. Since there is no substantial use of ethyl alcohol as fuel in spark ignition engines in the country this entry is being deleted. The deletion will take effect from the date on which the Finance Bill becomes an Act. However, a separate exemption for goods falling under goods Heading 2204.00 is issued so that these goods are exempted from Central Excise duty from 1-3-1989 (see Notf....
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.... In the said circular, it has been pointed out that the question whether rectified spirit/industrial alcohol etc. which is not I.C. engine grade was covered by Item 6(ii) of the old Central Excise Tariff and Heading 22.04 of the Schedule to the Central Excise Tariff Act, 1985 was still being debated. This position had also been taken note of by the Ministry of Law in their U.O. Note dated 6-8-1987 a copy of which has been made available. The fact that the practice was not uniform and collectorates other than Baroda had not been treating the product as falling under the item/Heading in question has come out in the note. Copies of orders passed in this regard in the Pune and Chandigarh Collectorates have been submitted while any such decisions elsewhere may not be conclusive of the classification question, as rightly held by the Collector on the authority of decisions and judgments to that effect, the fact that such possibilities existed did point to the entertainment of a bona fide belief on the part of the appellants that their product did not attract duty under that Heading. They had contested the directions from the Departmental authorities to take licence and follow the required....