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TMI Blog2020 (9) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the ratio of 95:5 at the time of clearance from the Miraj unit to the customers in tankers. The price per KL of EBP (which was mentioned in the invoice as motor spirit) was similar to the price charged by the appellant for unblended motor spirit to the customers. The Commissioner while adjudicating the demand notice for recovery of excess duty alleged to have been collected on the quantity of ethanol blended with Motor spirit, took cognizance of the fact about the activity/process of blending, whether amounts to manufacture or otherwise. Following the order of the Commissioner of Central Excise and Customs, Goa, he was also of the view that the activity of blending of motor spirit with ethanol amounts to manufacture under Section 2(f) of Central Excise Act, 1944. However, he has proceeded to observe that the appellant had failed to deposit the excess amount of duty collected from the customs on the quantity of EBP blended with motor spirit. There are no merit in the reasoning of the learned Commissioner in confirming the amount under Section 11D of the Central Excise Act, 1944. Once it is held that the activity of blending 5% of the ethanol with 95% of motor spirit result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . - Excise Appeal No. 1450 of 2007 - A/85650/2020 - Dated:- 12-6-2020 - HON BLE DR. D.M. MISRA, MEMBER (JUDICIAL) AND HON BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri M.H. Patil, Advocate for the Appellant Shri N.N. Prabhudesai, Supdt, Auth Representative for the Respondent ORDER Per: Dr. D.M. Misra This is an appeal filed by M/s Indian Oil Corporation Ltd., Miraj (IOCL) against Order-in-Original No. II/COMMISSIONER/ GOA/CX/2007 dated 31.08.2007 passed by the Commissioner of Central Excise, Goa. The Appeal has been decided by this Tribunal vide order dated 17.07.2017. Aggrieved by the said order, Revenue filed an appeal before the Hon'ble Bombay High Court at Goa. The Hon'ble High Court vide its order dated 09.01.2019 remanded the matter to the Tribunal to decide the matter afresh taking into consideration all the materials/evidences on record. On the first date of hearing the Ld. Advocate for the appellant has submitted that during the course of investigation statements of various persons were recorded by the Department, but copies were not handed over to them. Consequently, the Department was directed to hand over all the statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33.560KL of duty paid motor spirit from their Vasco unit which wasblended with712.290 KL of ethanol and obtained total quantity of 14245.850 KL of ethanol blended motor spirit(EBP). These quantities were sold to the ultimate customers from whom total amount including amounts towards Central Excise duty on Ethanol was also collected. It is alleged that IOCL, Miraz has collected an additional amount of ₹ 75,94,886/- as excise duty from the buyers on the additional quantity of 712.290 KL of EBP as Motor Spirit which was not paid to the govt., hence proposed to be recovered under Section 11D with interest under sec.11DD of Central Excise Act, 1944. On adjudication, the demand was confirmed with interest. Hence, the present Appeal. 3. Learned Advocate Shri M.H. Patil for the appellant has submitted that the basis of allegation in the show-cause notice was that the appellant had collected excess amount of duty on sale of EBP during the period 3.5.2002 to 26.12.2002 on the quantity of Ethanol blended with Motor Spirit by theoretically calculating the sale of Ethanol in the mixture of EBP. He has submitted that to substantiate the allegation in the show-cause notice, however, no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11D of Central Excise Act,1944.Even if such activity amounts to manufacture duty should have been demanded under section 11A and under sec.11D of CEA,1944. 3.3 Further, he has submitted that before the Hon'ble Bombay High Court referring to the statements of Mr. P. Subba Raj and others, it was argued by the Revenue that in these statements, the employees have averred that excess duty was collected by IOCL, Miraz but not paid to the Department. He has submitted that since these statements were not part of the show-cause notice, hence copies were not supplied to them. Therefore, neither in their reply to SCN nor before the Hon ble High Court they could answer the said evidence. These statements are now provided to the appellant on the direction of the Tribunal during the remand proceeding. Thus, analyzing these statements, it can be stated that there is no categorical admission of recovery of duty separately in the invoices on the quantity of ethanol contained in EBP; it is admitted that only a composite price was charged on the invoices. 3.4 Further, analyzing the statements of P. Subbaraj, the learned Advocate has submitted that Mr. Subbaraj was not aware of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween EBP and Motor spirit, purchasers were not aware whether they were purchasing EBP or pure petrol; uniform price was being charged. On these facts, Department wrongly formed an opinion that excess excise duty was collected on the quantity of Ethanol in EBP, therefore, Section 11D of Central Excise Act, 1944 was attracted even though Central Excise duty was not shown separately in the invoice. 3.5 He has further submitted that when the activity of blending ethanol with motor spirit does not amount to manufacture, the provisions of Section 11D of Central Excise Act, 1944 would not apply for the clearance during the relevant period as it is only with effect from 10.5.2008 Sub-section (1A) in Sec.11D was inserted to cover such eventuality, subject to recovery of duty separately in the invoice but not deposited. It is his contention that for the activity of blending of the ethanol with motor spirit if held to be amounting to manufacture, then it would be a case of short levy and non-levy etc., hence Section 11A is attracted and not Sec.11D of CEA, 1944. 3.6 Further, he has submitted that the Tribunal in the case of CCE, Coimbatore Vs. Everest Industries Ltd. vide Final Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, additional motor spirit was generated to the extent of ethanol quantity added to it. These additional quantity of EBP was sold as motor spirit and at the same price as motor spirit. During the period from 3.5.2002 to 26.12.2002, they had blended 13535.560KL of motor spirit with 712.290 KL of Ethanol and obtained 14245.850 KL of EBP. This EBP was cleared and sold under regular sales invoices and an amount of ₹ 75,84,886/- as an excess central excise duty recovered by the appellant but not deposited with the Government. 4.2 Referring to the statement of Shri P. Subbaraj, Sr. depot Manager of Miraz unit, the learned AR for the Revenue has submitted that in his various statements in explaining the method of blending, quantity of motor spirit procured from their Vasco unit and then blended with ethanol at Miraz unit, Shri Subbarajhas stated that additional quantity of motor spirit obtained through blending had been sold at the same rate as that of unblended motor spirit. He has further stated that there is no difference in the rate of blended and unblended motor spirit and they did not mention specifically in their sales invoices, description of the goods as blended or unbl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gredients mentioned under Section 11D of the Central Excise Act, 1944 is clearly attracted in the present case. He has submitted that blending of 5% ethanol with 95% of motor spirit amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944, as has been held by the Commissioner of Central Excise Customs, Goa in the Order-in-Original dated 24.2.2006. Even though the demand of duty confirmed in the said order of the Commissioner was set aside by CESTAT vide order dated 07.08.2007, following the notification issued in terms of Section 11C of Central Excise Act, 1944 but the goods were held to be excisable and exempted. Further, the activity of blending of Ethanol with MS has been admitted as amounting to manufacture by their head office and their unit at Vasco and Miraz. The EBP manufactured was later exempted, from payment of duty under notification No. 26/2002-CE dated 1.3.2002 as amended by Notification No. 62/2002-CE dated 31.12.2002. 4.5 Further, he has submitted that the demand has been raised under Section 11D(2) and in view of the judgment of Hon'ble Gujarat High Court in the case of Patlad Bulkhi Das Mills Co. Ltd. vs. UOI 2000 (126) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no consideration of even the assessee s contention that the assessee was nt at all liable for payment of an excise duty since the assessee is not at all involved in any manufacturing. Mr. Srivastava is right that the other evidence adduced even by the assessee is not considered in the impugned order. Since several aspects have also not been considered by the CESTAT or in any case the impugned order does not reflect that such aspects have been considered, we are constrained to set aside the impugned order and remand the matter for disposal afresh. 12. Accordingly, we set aside the impugned order dated 17th July, 2017 and remit the appeal No. E/1450/2007 to the CESTAT for disposal afresh in accordance with law and on its own merit. We clarify that our observations in this order are only prima facie and all contentions of parties are expressly left open for adjudication by the CESTAT. Consequently, the appeal is taken up for hearing after handing over the necessary statements relied upon by the adjudicating authority in passing the impugned order to the Appellant . 6.2 The issue involved in the present appeal for determination is whether the appellants are requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been argued that by the subsequent order dated 26.2.2006, the Commissioner of Central Excise Customs, Goa held that blending of motor spirit with ethanol amounts to manufacture, hence chargeable to duty. It is their contention that once the goods are manufactured, ethanol loses its identity and the resultant product become motor spirit only, hence separating the price of ethanol from the total price of motor spirit and apportioning the duty payable on motor spirit proportionately to ethanol is contrary to the principles of law and hence not sustainable. It is their further contention that the recovery is proposed invoking both the provisions i.e. Sec.11A and Sec. 11D which is not allowed in view of the judgment of this Tribunal in Bharat Petroleum Corporation Ltd. s case(supra). 6.5 Before analyzing the issue on applicability of Section 11D to the facts of the present case, it is necessary to reproduce the said provision, as was in force during the disputed period, which reads as below: Section 11D. Duties of excise collected from the buyer to be deposited with the Central Government (1) Notwithstanding anything to the contrary contained in any order or directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11D of Central Excise Act, 1944, in our considered opinion, cannot be sustained being contrary to the scheme of the Act. 6.7 Also, alternatively even if it is assumed that the process of blending of ethanol with motor spirit does not amount to manufacture under Section 2(f) of Central Excise Act, 1944, even than the duty paid on motor spirit (EBP) cannot be construed as duty paid separately on Motor spirit and proportionate duty applicable to ethanol in the total duty be recoverable under Section 11D of Central Excise Act, 1944, when the price charged was inclusive of duty, and the duty attributable to Ethanol is not shown and recovered separately in the invoice. This Tribunal in the case of M/s National Organic Chemical Industries Ltd. (supra) held that the provisions of Section 11D have to be read alongwith other provisions and it is observed that only where any amount is collected as representing as duty of excise then only it is to be credited to the Government. In the present case, the Revenue could not show that the appellant after blending ethanol with duty paid motor spirit collected separately, mentioning the duty on ethanol in the invoices, but not paid to the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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