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TMI Blog2008 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... el (methyl ester) therefrom. The pure bio-diesel so obtained will then be mixed with petro-diesel (hydrocarbons) to produce a bio-diesel blend which will be a mixture of pure bio-diesel (methyl ester) (60%) and petro-diesel (hydrocarbons) (40%). The applicant initially stated that the finished product, i.e. the blend, would fall under CETH No. 2920 90 58 of the Central Excise Tariff Act, 1985 (CETA). The applicant sought ruling of this Authority on the following question: "What is the duty payable on a product which is a blend of 60% by weight of bio-diesel and 40% by weight of petro-diesel ? As this blend falls under CETH 2920 9058, it should attract the duty applicable on bio-diesel. 2. The Commissioner of Central Excise, Customs & Service Tax, Raigad, who is the jurisdictional Commissioner in this case, stated in his comments that, though the applicant had obtained central excise registration, it had not commenced production so far. He also stated that the finished product (blend) would be classifiable under Chapter 38 of the CETA. In response to the comments of the Commissioner, the applicant filed written submission, in which it conceded that the finished product would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that if the proposed blending activity is regarded as manufacture, then the applicant will have to pay duty twice over, as it will not get any input credit for the duty paid on diesel; it will first pay duty on petro-diesel and then on the bio-diesel blend(finished product). 4. The jurisdictional Commissioner states that the process of blending of bio-diesel with petro-diesel amounts to manufacture, and the blend would meet the requirements of IS1460 'Automotive diesel fuel - Specification'. He also states that the benefit of the exemption notification No. 4/2007-CE dated 1.3.2007 cannot be extended to the finished product of the applicant, inasmuch as the exemption is meant for pure bio-diesel which is distinct from the blended mixture of pure bio-diesel and petro-diesel. According to the Commissioner, the said notification only exempts alkyl esters of long chain fatty acids, in their pure form, obtained from vegetable oils, commonly known as bio-diesel, and not all esters and their products. In the case of the applicant, methyl ester is an intermediate product, which is then mixed with petro-diesel. Thus the finished product of the applicant does not strictly conform to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has held the field ever since and has been followed in the subsequent decisions. This is evident from the following observation of another Constitution Bench of the Supreme Court in Ujagar Prints Etc. vs. UOI and Others1988 (38) ELT 535(SC) : " The prevalent and generally accepted test to ascertain that there is 'manufacture' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognized as a distinct and new article that has emerged as a result of the processes" The Court also observed in Delhi Cloth and General Mills Ltd. case (supra) that the new article that emerges in the process of manufacture should be such as is known to the market. Later, a Division Bench of the Supreme Court in UOI vs. Parle Products Pvt. Ltd. 1994(74) ELC 492(SC) was pleased to observe: "The question whether the process involved in converting the "aluminiumfoil" into "paper-backed aluminium-foil" amounts to manufacture within the meaning of S. 2(f) of the Central Excises and Salt Act, 1944, or not, turns upon whether as a result of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrol-diesel results in a physical mixture, that is to say, no chemical reaction is involved in this process. The blend contains alkyl esters of long chain fatty acids as also hydrocarbon compounds, such as paraffins, naphthenes, aromatics and olefins. It can no longer be called either pure alkyl long chain fatty acids or pure hydrocarbons. Though it is a physical mixture, but it is different from pure bio-diesel and petrol-diesel. According to IIT, Mumbai, the blending is done to improve the physical properties to take advantage of the properties of the bio-diesel without having to modify the engine. Bharat Petroleum Corporation has stated that blending of bio-diesel with diesel is not allowed at petrol pump. We notice that Indian standard specifications exist for B100 bio-diesel. 8. It is evident from the above that in the process of blending, both pure bio-diesel and petro-diesel lose their individual identities and a new product emerges. The proposed bio-diesel blend would be a product commercially different from its parent compounds in chemical composition, characteristics and use. It will not have only methyl ester or only hydrocarbons, but will contain both the compounds. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ysical mixture of different organic compounds, namely methyl ester and hydrocarbons which have different chemical compositions. As such, this blend cannot be called 'separate chemically defined organic compound' as contemplated in (a) above. Now, coming to (b) above, it refers to mixtures of two or more isomers of the same organic compound. As per Wikipedia, 'isomers are compounds with the same molecular formula but different structural formulae'. The New Encyclopedia Britannica, Vol.6, 15th Edition states - 'isomerism, the existence of sets of two or more substances that have identical chemical compositions and molecular weight but different properties. The different substances that make up these sets are called isomers". As we know, methyl esters and hydrocarbons do not have the same chemical composition. According to Wikipedia- 'Esters consist of an inorganic or organic acid in which at least one -OH (hydroxyl) group is replaced by an Oalkyl (alkoxy) group'. On the other hand, according to Wikipedia, 'in organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon'. Thus, methyl ester and hydrocarbons are not isomers of each other, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless there is an express different intention indicated by the Central Excise Tariff Act, 1985 itself." We do not find the Central Excise Tariff Act expressing an intention different from the above HSN Note. As such, bio-diesel blend falls in CETH 3824 90 90. 10. Coming to the issue of exemption, it is seen that Notification No. 4/2007-CE dated 1.3.2007 amends Notification No. 4/2006-CE dated 1.3.2006 issued under section 5A of the Act. This section empowers the Central Government to exempt, in public interest, an excisable goods, wholly or partly, from the duty of excise, subject to the conditions, if any, that may be specified. The operative part of the Notification dated 1/3/2006 is as under-"In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory notes states the following in relation to biodiesel-"29.3. Excise duty on bio-diesel (alkyl esters of long chain fatty acid from vegetable oils falling under chapter 29 or 38) has been fully exempted. (S.No. 53A of the Notification No. 4/2006-Central Excise as inserted vide Notification No. 4/2007-Central Excise refers)" 11. At this juncture, it would be apt to refer to the relevant rules of interpretation. The duty of a court is to discover the true intention of the legislature. In the ordinary course, it should be taken for granted that the legislature has said what it meant and meant what it said. But where there is ambiguity in the language of the statute, or its true meaning is not clear, recourse can be had to the rules of interpretation. The following observation made by the Supreme Court on this aspect in Mangalore Chemicals & Fertilizers Limited vs. Deputy Commissioner of Commercial Taxes 1991(55)ELT 437(SC)is relevant- "Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation". ..... X X X X Extracts X X X X X X X X Extracts X X X X
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