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2019 (4) TMI 1072 - AT - Central ExciseProcess amounting to manufacture or not - manufacture of Xtra Mile Super Diesel and Xtra-premium MS by the process of blending of HSD and MS with multifunctional additives (MFA) - evasion of Central Excise Duty - HELD THAT - The issue is no more res-entigra in view of the Tribunal s decision in HINDUSTAN PETROLEUM CORPN. LTD. VERSUS COMMR. OF C. EX, DELHI ROHTAK 2008 (9) TMI 154 - CESTAT, NEW DELHI whereby the Tribunal, has held that a process or treatment to enhance the marketability of a product or to improve the value addition does not amount to manufacture. Appeal allowed - decided in favor of appellant.
Issues:
1. Whether the process of blending high-speed diesel (HSD) and motor spirit (MS) with multifunctional additives (MFA) amounts to manufacture for the purpose of Central Excise Duty liability. Analysis: The case involved a dispute regarding the classification of a process undertaken by an appellant company involving the blending of HSD and MS with additives as manufacture, leading to an alleged evasion of Central Excise Duty. The Adjudicating Authority confirmed the demand under Section 11A(2) along with interest and imposed a penalty under Section 11AC read with Rule 25 of the Central Excise Rule, 2002, which led to an appeal before the Tribunal. The appellant contended that the process of blending did not amount to manufacture as it did not result in the creation of a new product with different characteristics or uses. The appellant argued that the blending process merely enhanced the marketability and value of the products without changing their fundamental nature. The appellant highlighted that the quality of the blended products remained consistent with standard specifications, with the only difference being a reduction in sulfur content after mixing with additives. It was emphasized that the blended products were suitable for use in all vehicles, irrespective of age or type, and no specific recommendations were made by car manufacturers regarding the type of HSD or MS to be used. On the other hand, the Departmental Representative argued that the blending process did constitute manufacture, aligning with the findings of the impugned order. However, the Tribunal referred to a previous decision in Hindustan Petroleum Corporation Ltd. Vs. CCE, Delhi & Rohtak, where it was held that processes aimed at enhancing marketability or improving value addition do not amount to manufacture. The Tribunal noted that the blending process in question did not change the fundamental characteristics or uses of the products, as they continued to conform to standard specifications even after blending. Therefore, the Tribunal concluded that the impugned order could not be sustained, setting it aside and allowing the appeal filed by the appellant with any consequential relief. In conclusion, the Tribunal's decision clarified that the blending process undertaken by the appellant did not amount to manufacture for the purpose of Central Excise Duty liability, as it did not result in the creation of new products with distinct characteristics or uses. This ruling was based on the principle that processes aimed at enhancing marketability or value addition, without altering the fundamental nature of the products, do not fall under the purview of manufacture for excise duty purposes.
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