DRAFT CIRCULAR
(To elicit response/Comments only)
[Disclaimer:- This Draft Circular has been put up only to elicit public response. No final decision has been taken by Government/ Board. Government/ Board will proceed further in the matter only after due examination of the responses received.]
Responses to the draft circular may please be sent to goyaldilip@yahoo.com or faxed at 011-23094793 by 30th November ,2007.
Circular No. /2007-CX
F.No.83/04/2007-CX.3
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
New Delhi, , 2007
To
All Chief Commissioners of Central Excise and Customs,
All Chief Commissioners of Central Excise,
All Chief Commissioners of Customs,
All Commissioners of Central Excise and Customs,
All Commissioners of Central Excise,
All Commissioners of Customs,
All Commissioners of Central Excise (Appeals),
All Commissioners of Central Excise (Judicial),
Director General of Central Excise Intelligence,
Director General of Inspection (Customs & Central Excise),
Subject:- Withdrawal of circular no. 83/83/94-Cx dated 13.12.1994 and demand of duty on branded petrol and diesel.
1. Kind attention is invited to Board’s circular no. 83/83/94-CX, dated 13.12.1994 which clarifies that the process of mixing/blending 3% duty-paid methanol with 97% duty-paid motor spirit (commonly known as petrol) does not amount to `manufacture’. However, the contents of the said circular was re-examined in the context of the exemption given to 5% ethanol blended petrol from all duties of excise vide notification no 62/2002-CE, 63/2002-CE and 64/2002-CE dated 31.12.2002 as well as TRU circular No.685/1/2003–CX dated 2.1.2003 clarifying the scope of the exemption.
2. Further, it has been brought to the notice of the Board that a few petroleum companies are mixing/blending Motor Spirit (MS) with multi-functional additives (MFA), and
the resultant product is marketed as branded motor spirit viz. Power, Speed, Xtra Premium, etc. Similarly branded HSD is produced by mixing of additives and is known as Turbo Jet, Xtra Mile, etc, in the market.
3. In view of the above facts, the issue needed to be resolved was whether the process of mixing of multifunctional additives in the normal petrol/diesel amounts to ‘manufacture’ within the meaning of section 2(f) of the Central Excise Act, 1944.
4. Matter has been examined. Mixing of multi functional additives (MFA) in normal petrol and diesel results in value addition and duty is paid at a higher value when the branded product is cleared from the refinery. Mixing of MFA in normal MS/diesel imparts certain properties to the new product having a bearing on the performance of the IC engines. They are known differently in the common trade parlance as Speed, Power, Xtra premium , Xtra mile, Turbo jet, etc., and are sold at a higher price than normal petrol/diesel in retail.
5. Therefore, it has been decided to clarify that the process of mixing of additives in normal petrol/diesel results in emergence of a new product having a distinct name, character, and use, and as such the said process should be treated as a process amounting to `manufacture’. Consequently, Board circular No.83/83/94-CX dated 31.12.94 stands withdrawn.
6. Pending disputes, if any, may be decided accordingly.
7. Trade and field formations may be suitably informed.
8. Hindi version will follow.
Yours faithfully,
( Dilip Goyal )
Under Secretary (CX.3)
Room No.244C,North Block, New Delhi
Ph: 011-23092351: Fax 011-23094793
E-mail: goyaldilip@yahoo.com