TaxTMI 
TaxTMI 
2021 (11) TMI 113
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....l Gas. The appellant paid the duty at the time of removal of ethanol blended motor spirit on its clearance value. The appellant was issued a Show Cause Notice dated 09.06.05 wherein, it was alleged that the process of blending ethanol with motor spirit amounts to manufacture as: (a) Notification No.63/2003-CE specifically exempted EBMS from excise duty and that there was no exemption on EBMS for the period 01.07.2004 to 07.08.2004. (b) Circular F.No.366/5/2002-TRU dated 02.01.2003 uses the word manufacture for the process of blending 5% ethanol with 95% motor spirit to produce EBMS. 1.1 Further, that unblended motor spirit had been used captively by appellant to manufacture a new product namely EBMS. The benefit of captive consumption under Notification No. 67/95-CE dated 16.03.1995 was not available to motor spirit. Accordingly, it was proposed to demand excise duty on the motor spirit which was subsequently cleared as Ethanol blended motor spirit on payment of duty. The Show Cause Notice was adjudicated vide Order-In-Original dated 24.02.2006 whereby, the demand of excise duty was confirmed along with interest and penalty. The appellant being aggrieved by the....
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.... since, the motor spirit is used captively in the manufacture of EBMS. He submits that the process of blending 5% ethanol with 95% motor spirit to produce EBMS does not amount to manufacture therefore, when the appellant have paid the duty on the higher value i.e. on the value of EBMS, no duty can be demanded on the unblended motor spirit. He submits that there is no difference in the motor spirit and EBMS as both are treated as motor spirit and falling under the same CETH 27.10 and both conform to BIS Specification i.e. BIS specifications 2796 for motor spirit. He submits that this is the third round of appeal. In the same case earlier the hon'ble Tribunal remanded the matter. However, the impugned order has travelled beyond the scope of such remand by stating that CBEC Circular dated 13.12.19 refers to methanol whereas, the product in question in the present case was ethanol. He failed to appreciate that the said circular was considered by the Hon'ble Tribunal as well and found to be relevant therefore, it was beyond the scope of remand for the respondent to consider and adjudicate upon the applicability or otherwise of the said circular. He further submits that the mere fact an ....
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....ral Excise Act, 1944, vide which it was directed that no duty was payable on EBMS for the period 1.7.2004 to 3.8.2004 if duty had been paid on motor spirit and ethanol. It is evident from this notification that the government has accepted that duty is not required to be paid at both the stages i.e. Prior to and after addition of ethanol but only at one stage. As the appellant had already paid higher duty amount of 3,97,68,000/- on EBMS, it could not have been called upon to pay excise duty on motor spirit prior to blending of ethanol. He referred to CBEC Circular No. 1078/02/2021-CX dated 22.06.2021 which has clarified that if duty is paid on 5% ethanol and 95% motor spirit then on clearance of EBMS no duty is to be collected and the product need not suffer duty again and is exempted from various duties of excise. Reliance was placed on the case of Commissioner of Central Excise, Rohtak vs. Indian Oil Corporation Ltd- 2015 (321) E.L.T. 571 (P & H), where Hon'ble High Court held that once duty was paid on motor spirit, assessee was entitle to exemption on EBMS. The purpose of exemption notification was to prevent payment of duty on 5% ethanol at both the stages by the assessee....
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....s be considered to be intermediate goods and therefore, the question of motor spirit not being exempted in terms of the above notification did not arise. The respondent ought to have appreciated that EBMS was nothing but motor spirit albeit with Ethanol blended in it. The appellant has consciously chosen to pay duty at a later stage mainly after blending ethanol in the motor spirit on the higher value with a view to comply with the law as laid down by the Hon'ble Supreme Court interalia in the judgments of JG GLASS (supra) & SIDDHARTHA TUBES LTD. v CCE- 2000 (115) ELT 32 (SC) 2.7 In view of the above submission, appellant submits that the impugned order be set aside. 03. Shri S.N.Gohil, learned Superintendent (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order. 04. We have carefully considered the submissions made by both the sides and perused the records. The issue to be decided by us in this appeal is that when the appellant paid the duty on ethanol blended motor spirit on its value of clearance that whether the activity of blending of motor spirit with ethanol is amount to manufacture or otherwise and whether the a....
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....above circular it was clarified that mixing of duty paid methanol with motor spirit whether it amounts to manufacture or otherwise within the meaning of section 2(f). The Chief Chemist, CRCL, New Delhi's opinion to be followed. The said opinion is extracted below:- "In the instant case it is stated that methanol is blended product conforms to the BIS specifications prescribed for motor spirit. This process involves only simple blending and no new product having different properties, characteristics, or use emerges; thus mixing 3% methanol in motor spirit, which does not cease to be motor spirit after mixing 3% methanol, in my opinion, will not amount to "manufacture" as envisaged in section 2(f) of the Central Excise and Salt Act, 1944." 4.2 In view of the above opinion, it is clear that blending of ethanol with 95% motor spirit does not amount to manufacture as envisaged in section 2(f) of Central Excise Act, 1944. The contention of the adjudicating authority that the circular mention about methanol not ethanol, we find no difference whether it is methanol or ethanol since the property of both are same and the purpose of mixing is also same which is evident from the ab....
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....D after being blended with small quantity of MFAs remain MS and HSD only, conforming to ISI specifications IS : 2796- 2000 and IS : 2000 respectively. Just because blending improves their quality and after blending they are sold under different brand names like 'Speed', 'Power', 'Turbojet' etc. they do not become products different from unblended MS/HSD, with different characteristics and usages. Their characteristics remain the same, as they both have to conform to the ISI specification for unblended MS/HSD and their usage also remain the same. Hon'ble Supreme Court in its judgment in case of CCE v. Sudarshan Chemical Industries (supra) and this Tribunal in its judgments in cases of Lakme Lever Ltd. v. CCE (supra) and CCE v. Mysore Ammonia Pvt. Ltd. (supra) has held that a process or treatment to enhance the marketability of a product or improve the value addition does not amount to manufacture. In this case, the blending only improves the quality of the MS/HSD resulting in better value addition, without charging the basic characteristics and usages of the products." In the case of BHARAT PETROLEUM CORPORATION LTD. v. CCE, PATNA; 2013 (295) ELT 106 (Tri-Kol) 5.1 ....
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....(supra) and this Tribunal in its judgments in cases of Lakme Lever Ltd. v. CCE (supra) and CCE v. Mysore Ammonia Pvt. Ltd. (supra) has held that a process or treatment to enhance the marketability of a product or improve the value addition does not amount to manufacture. In this case, the blending only improves the quality of the MS/HSD resulting in better value addition, without charging the basic characteristics and usages of the products." 5.2 Besides applying the principles laid down on the subject by the Hon'ble Supreme Court in a series of judgments in the cases of - (i) South Bihar Sugar Mill v. UOI reported in 1978 (2) E.L.T. J336 (S.C.); (ii) UOI v. Delhi Cloth Mills Ltd. reported in 1977 (1) E.L.T. J199 (S.C.); and (iii) Tega India Ltd. v. CCE reported in 2004 (164) E.L.T. 390 (S.C.), the Bench has held that the conditions to convert a process into manufacture are not satisfied in the present case, as no new and different article with distinct name, characteristics and usages emerge. It is observed as : "4.3 ..........This criteria of manufacture is not satisfied in this case as, as mentioned above, the MS and the HSD after blending with MFA remain MS an....
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....S with MFA does not result into the manufacture of a new product, even if the emerged product is branded as 'speed' and marketed accordingly after some value addition. The said judgment was later followed by another Bench of the Tribunal in the case of Bharat Petroleum Corporation Ltd. v. CCE, Lucknow reported in 2009 (240) E.L.T. 403. We are in agreement with the said judgments. Also, it has been brought to our notice that on similar facts, show cause notice issued by other Commissionerate has been dropped holding that mixing of MS with MFA does not result into a new product and accordingly no manufacture takes place within the meaning of Section 2(f) of the CEA, 1944. In view of above, we do not find force in the arguments advanced by the Revenue that the resultant product namely, 'speed' which emerges after mixing MS with MFA is liable to duty as the process of mixing amounts to manufacture within the definition of manufacture under Sec. 2(f) of CEA, 1944. Consequently, we set aside the impugned Order-in-Original passed by the Commissioner of Central Excise and allow the appeal filed by the Appellant. In the case of HINDUSTAN PETROLEUM CORPORATION LTD. v. CCE; 2015 (319) ELT ....
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....36 (S.C.) and Union of India v. Delhi Cloth Mills Ltd. reported in 1977 (1) E.L.T. J199 (S.C.) and Tega India Ltd. v. CCE reported in 2004 (164) E.L.T. 390 (S.C.) has held that manufacture implies a process, as a result of which a new product with distinctive name, character and usages emerges, that the word 'manufacture' implies change, but every change in raw material is not manufacture and that there must be such a transformation in the raw as a result of the processing that a new and different article with distinct name, characteristics and usages emerges. This criteria of manufacture is not satisfied in this case as, as mentioned above, the MS and the HSD after blending with MFA remain MS and HSD only and except for a brand name being added to their names, there is no change in their basic characteristics and usages. As mentioned above, there is no separate ISI specification for branded MS or branded HSD and both branded as well as unbranded MS/HSD have to conform to the same ISI specifications. Similarly, there is no change in their use. Thus applying the above-mentioned criteria laid down by the Hon'ble Supreme Court as to what constitutes manufacture, the process of blendin....
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....or treatment to enhance the marketability of a product or improve the value addition does not amount to manufacture. In this case, the blending only improves the quality of the MS/HSD resulting in better value addition, without charging the basic characteristics and usages of the products. 4.2 The ratio of the Hon'ble Supreme Court's judgment in case of J.G. Glasss v. UOI (supra) in which it was held that printing of glass bottles does not amount to manufacture is squarely applicable to the facts of this case. 4.3 Hon'ble Supreme Court in a series of judgment - South Bihar Sugar Mills v. UOI reported in 1978 (2) E.L.T. J336 (S.C.) and Union of India v. Delhi Cloth Mills Ltd. reported in 1977 (1) E.L.T. J199 (S.C.) and Tega India Ltd. v. CCE reported in 2004 (164) E.L.T. 390 (S.C.) has held that manufacture implies a process, as a result of which a new product with distinctive name, character and usages emerges, that the word "manufacture" implies change, but every change in raw material is not manufacture and that there must be such a transformation in the raw as a result of the processing that a new and different article with distinct name, characteristics and us....
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.... of the appellant. It has been brought under notice by the Ld. Advocate on behalf of the appellant that the issue is covered by the Tribunal's order in the case of Bharat Petroleum Corpn. Ltd. v. Commr. of C. Ex. & S. Tax, Patna [2013 (295) E.L.T. 106 (Tri.-Kolkata)] and also in the case of Hindustan Petroleum Corpn. Ltd. v. Commissioner [2009 (234) E.L.T. 648 (Tribunal)]. Following the ratio laid down in the above cases which squarely cover the present case, we allow the appeal. 4.3 In view of the consistent view taken by this tribunal in the aforesaid judgments, blending of additives with the motor spirit does not amount to manufacture. In the present case not only it is supported by the aforesaid judgments but there is a clear board circular according to which the blending of ethanol and motor spirit cannot be held as amount to manufacture. The adjudicating authority has also made reliance on Notification No.62/2002- CE, 63/2002-CE & 64/2002-CE all dated 31.12.02 and contended that since by these notifications EBMS is exempted that shows that the EBMS is a manufactured goods. We completely disagree with this proposition of the learned adjudicating authority that merely becaus....
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....is not a process of manufacture and no addition can be made to the assessable value of the black pipe on account of the galvanisation that subsequently occurred. The Tribunal rejected the contention. It said that the appellants themselves had, in their classification list, declared M.S. black pipes and galvanised pipes as their products. In such a situation, the mere fact that galvanisation was done subsequent to paying duty on the M.S. black pipes could not, by itself, be a ground for not including the cost of galvanisation in the assessable value of the black pipes subjected to the process of galvanisation. While that process did not amount to manufacture, it added to the intrinsic value of the product to make up the full commercial value which was realised by the appellants by charging a higher price for such pipes covering the cost of galvanisation. 3. We are in agreement with the view taken by the Tribunal. The mere fact that the process of galvanisation is carried on in another shed can make no difference. When the assessable value is to be calculated of the galvanized black pipe made by the appellants, the element of the cost of galvanization must form a part thereo....