2011 (5) TMI 742 - AT - Central Excise

Manufacture - Appellant points out that the exemption is provided for Motor Spirit (commonly known as Petrol) when intended for use in Ethanol Blended Petrol. The notification does not talk of manufacture of Ethanol Blended Petrol. Further, there is no condition as to where blending should be done - Held that - Appellant is a Public Sector Undertaking and concession to the petroleum products has been given by the Notification 62/2002-C.E. Prima facie, there appears no violation of the conditions specified in the Notification, calling for pre-deposit of duty, at this stage shall cause undue hardship to the Appellant, requirement of pre-deposit waived

Summary

Issues:
1. Interpretation of Notification No. 62/2002-C.E. regarding concession on Motor Spirit for Ethanol Blended Petrol.
2. Determination of whether blending of products constitutes manufacturing as per the notification.
3. Assessment of duty demand based on the Revenue's argument.
4. Consideration of exemption provisions for Public Sector Undertakings.

Analysis:
1. The primary issue in this case revolves around the interpretation of Notification No. 62/2002-C.E., which provides a concession on Motor Spirit for use in Ethanol Blended Petrol. The Appellant procured Motor Spirit and Ethanol to create 5% Ethanol blended petrol, claiming the concession. The Counsel argues that the notification does not specify where blending should occur and that the concession aims to promote bio-fuels, supporting the Appellant's position.

2. The Revenue contends that blending after delivery into tank-trucks does not constitute manufacturing as envisioned in the notification. A Show Cause Notice was issued, alleging no manufacture of Ethanol Blended Petrol and demanding duty payment. The core dispute lies in whether the blending process qualifies as manufacturing under the notification's terms, leading to the duty demand.

3. The Adjudication order supported the Revenue's stance, emphasizing the absence of manufacturing in the Appellant's factory. However, upon review, the Tribunal found that as a Public Sector Undertaking, the Appellant seemingly adhered to the notification's conditions. Consequently, the Tribunal waived the pre-deposit requirement during the appeal to prevent undue hardship.

4. The Tribunal's decision hinged on the lack of apparent violation of the notification's conditions by the Appellant, considering the concession granted to petroleum products under Notification 62/2002-C.E. The waiver of pre-deposit aimed to alleviate any potential hardship faced by the Appellant during the appeal process, reflecting a balanced approach to the legal and commercial aspects of the case.