2012 (5) TMI 248 - AT - Central Excise

Blending of petrol and Multi-Functional Additive - MS denoting the same as Speed . - Manufacture - held that - blending of MS 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. - following the decision in the case of Hindusthan Petroleum Corporation Ltd. vs. CCE, Delhi & Rohtak (2008 (9) TMI 154 - CESTAT, NEW DELHI), decision in favor of assessee.

Issues Involved:
1. Dutiability of the product 'Speed' obtained by blending Motor Spirit (MS) with Multi-Functional Additive (MFA).
2. Whether the process of blending MS with MFA constitutes 'manufacture' under Section 2(f) of the Central Excise Act, 1944.
3. Applicability of the extended period of limitation for demand of duty.
4. Binding nature of the Tribunal's previous decisions on similar issues.

Detailed Analysis:

1. Dutiability of the Product 'Speed':
The primary issue revolves around whether the product 'Speed', obtained by blending MS with MFA, is dutiable. The Appellant argued that 'Speed' is essentially the same as MS, with no change in its basic characteristics, usages, and specifications. They contended that the mere addition of MFA, which constitutes about 0.04% of the product, does not alter its fundamental nature. The Revenue, however, claimed that the blending process results in a new product with distinct physical and chemical characteristics, making it dutiable.

2. Whether Blending Constitutes 'Manufacture':
The Appellant argued that the blending process does not amount to 'manufacture' as defined under Section 2(f) of the Central Excise Act, 1944. They cited several Supreme Court judgments, including Union of India vs. JG Glass Industries and CIT vs. Tara Agencies, to support their claim that no new product emerges from the blending process. The Tribunal agreed with the Appellant, referencing its previous decision in Hindustan Petroleum Corporation Ltd. vs. CCE, Delhi & Rohtak, which held that the process of blending MS with MFA does not result in a new product and, therefore, does not constitute 'manufacture'.

3. Applicability of the Extended Period of Limitation:
The Appellant contended that the demands were barred by limitation, as there was no suppression of facts. They argued that the process of adding MFA to MS was well-known to the Department, and other Commissionerates had issued conflicting orders on the same issue. The Tribunal did not explicitly address this point in their final decision, focusing instead on the primary issue of whether the blending process constituted 'manufacture'.

4. Binding Nature of Previous Tribunal Decisions:
The Revenue argued that the Tribunal's previous decision in the HPCL case should not be binding, as the Supreme Court had admitted a Civil Appeal against it. The Tribunal, however, found no reason to deviate from its earlier decision. They cited the Supreme Court's judgment in Kunhayammed vs. State of Kerala, which states that a judgment remains binding unless specifically stayed or suspended by the Court. The Tribunal reiterated that the blending of MS with MFA does not result in a new product and upheld its previous rulings in similar cases.

Conclusion:
The Tribunal concluded that the process of blending MS with MFA does not constitute 'manufacture' under Section 2(f) of the Central Excise Act, 1944. Consequently, the product 'Speed' is not dutiable. The Tribunal set aside the Order-in-Original passed by the Commissioner of Central Excise and allowed the Appeal filed by the Appellant.

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