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Judgment
Heard both sides and examined the case records.
Briefly stated, the facts of the case are that the appellant herein is engaged in the manufacture of Ethanol Blended Petrol, falling under Chapter Heading 27101119 of the Schedule to the Central Excise Tariff Act, 1985. The case of the Department is that during the disputed period, the appellant had manufactured 156KL of 10% Ethanol Blended Petrol, but did not discharge the duty liability attributable to such manufacturing activity. On the basis of such observations, show cause proceedings were initiated against the appellant, which culminated in the adjudication order dated 16.04.2010, wherein the learned Additional Commissioner of Central Excise & Customs, Belgaum had confirmed Central Excise duty demand of Rs.21,45,078/- along with interest and also imposed penalty of Rs.1,00,000/- on the appellant. Feeling aggrieved with the said adjudication order, the appellant had preferred appeal before the learned Commissioner (Appeals), Mangalore, which was disposed of vide impugned order dated 18.10.2012, in upholding the adjudication order and rejecting the appeal filed by the appellant. Against the impugned order, the appellant has preferred the present appeal before the Tribunal.
Learned Advocate appearing for the appellant submitted that the issue arising out of the present dispute is no more res integra in view of the Final Order No.20174/2018 dated 09.02.2018 passed by the Tribunal in Appeal No. E/1086/2010-DB (M/s Bharat Petroleum Corporation Limited). Thus, he submitted that the adjudged demand confirmed on the appellant cannot be sustained for judicial scrutiny.
On the other hand, learned Authorized Representative appearing for the Revenue reiterated the findings recorded in the impugned order.
Heard both sides and perused the records of the case.
The issue involved in the present case is whether the production of 10% Ethanol Blended Petrol ('EBP') which involves the blending of 10% duty paid ethanol with 90% duty paid Motor Spirit (MS, commonly known as petrol) amounts to manufacture in terms of Section 2(f) of the CEA and whether the same is liable for excise duty prior to the issuance of Notification Nos.61,62,63, & 64/2008-CE dated 24.12.2008.
The dispute involved in this case pertains to the period from 16.12.2008 to 23.12.2008. We find that by placing reliance on the decision of M/s Bharat Petroleum Corporation Limited, 2009 (240) ELT 403 (Tri. Delhi), this Tribunal in the relied upon case (supra) has set aside the Order-in-Appeal and allowed the appeal filed by M/s Bharat Petroleum Corporation Limited holding that the process of blending of small quantity of MFA with MS and HSD does not amount to manufacture and thus, would not attract payment of Central Excise duty. The relevant paragraphs in the said order are extracted herein below.
"5. We have perused the above decision, wherein the Tribunal has observed as follows:
Learned Advocate placed reliance on decision of the Tribunal in Hindustan Petroleum Corporation Ltd. and others v. CCE, Delhi and Rohtak [2009 (234) E.L.T. 648 (T) = 2009 (162) ECR 16 (Tri- Delhi)] whereby the Tribunal has held that the process of treatment to enhance the marketability of a product or to improve the value addition does not amount to manufacture. The relevant portion of the said decision is reproduced below :
"4 We have carefully considered the submissions from both the sides. The Appellants bring duty paid MS and HSD to their Depots/Installations where a part of such MS/HSD is blended with MFAs and sold as branded MS/branded HSD under brandnames like "Speed", "Power", "Turbojet" etc. The branded MS/HSD are claimed by the Appellants to increase the engine efficiency by reducing the formation of carbon deposits and accordingly are sold at a premium. The point of dispute in this group of appeals is as to whether the process of blending ordinary MS/HSD with very small quantity of MFAs (0.04 per cent to 0.06 per cent), to make branded MS/HSD amounts to manufacture. After considering the rival contentions on this point, we, for the reasons given below, hold that this process does not amount to "manufacture" and hence would not attract any Central Excise Duty.
4.1 The MS and HSD after being blended with small quantity of MFAs remain MS and HSD only, conforming to ISI specifications IS:2796 -2000 and IS: 1460 -2000 respectively just because blending improves their quality and after blending they are sold under different brandnames 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 the case of CCE v. Sudarshan Chemical Industries (Supra) and this Tribunal in its Judgments in case 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."
Following the ratio of the said decision of the Tribunal in the case of Hindustan Petroleum Corpn. Ltd. and others (supra), the impugned order is set aside and appeal is allowed with consequential relief.
By following the above decision rendered in the BPCL Vs CCE (supra), we set aside the impugned order and allow the appeal."
On careful consideration of the relied upon decision by the Tribunal, we find that the issue arising out of the present dispute is no more open for any debate. Accordingly, we are of the view that the adjudged demands confirmed on the appellant cannot be sustained on merits.
Therefore, we do not find any merits in the impugned order passed by the learned Commissioner (Appeals). Accordingly, by setting aside the said order, the appeal is allowed in favour of the appellant.
(Dictated and pronounced in open court)