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2021 (11) TMI 113 - AT - Central ExciseProcess amounting to manufacture or not - clearance of ethanol blended motor spirit (EBMS) - exempt goods or not - period 01.07.2004 to 07.08.2004 - scope of Circular F.No.366/5/2002-TRU dated 02.01.2003 - 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? - whether the appellant once again required to pay duty on motor sprit unblended? HELD THAT:- Even after blending of 5% ethanol with 95% motor spirit, the product EBMS remains motor spirit as per the chemical nature of product as well as use thereof. It is also the fact that whether it is a unblended motor spirit or ethanol blended motor spirit, both falls under same BIS specification 2796, it is also established that whether it is unblended or blended product fall under the same class. There is no different product arise only by activity of blending with 5% ethanol. 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, there are 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 above Para 4.1 of IS 2796-2000. The only issue is that whether the blending of either ethanol or methanol with motor spirit amount to manufacture. This is abundantly made clear as per the above opinion of the chemical examiner and the same was accepted by the Central Board of Excise & Customs. Therefore, this circular being binding on the adjudicating authority should have scrupulously followed the same and ought not to have been held that blending of ethanol with motor spirit is amount to manufacture. In the case of HINDUSTAN PETROLEUM CORPN. LTD. VERSUS COMMR. OF C. EX, DELHI & ROHTAK [2008 (9) TMI 154 - CESTAT, NEW DELHI] it was held that mere blending of motor spirit with small quantities of additives to improve the quality of motor spirit and to reduce emission levels does not amount to manufacture. Since even after addition motor spirit continues to be used as motor spirit. 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 because a product is exempted by itself cannot be a manufacture goods. First, it is to be tested that activity is whether amount to manufacture and if it is so, then only the application of exemption notification comes into play. Therefore, it is settled law that merely by any product is appearing either in the notification or tariff entry, for this reason it cannot be concluded that the goods are manufactured goods. The process independently to be seen that whether it amounts to manufacture or not - thus, blending of 5% ethanol with 95% motor spirit which made the product EBMS does not amount to manufacture. Payment of duty on the value of EBMS by the appellant - HELD THAT:- It is settled law that excise duty needs to be paid on the product in the form it is cleared at a value from the factory. This issue has been settled by the Hon’ble Supreme Court in the case of SIDHARTHA TUBES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [1999 (11) TMI 69 - SUPREME COURT]. The appellant has correctly paid the duty on the EBMS and they were not required to pay duty on motor spirit. It is also to be noted that the appellant had paid duty on EBMS instead of motor spirit that they paid higher duty as compared to the duty payable on motor spirit therefore, there is no loss of revenue by paying the duty on EBMS - the payment of duty by the appellant on EBMS is correct and legal and they are not required to pay any duty again on the motor spirit. Appeal allowed - decided in favor of appellant.
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