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Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
Circular No. 1078/02/2021 – CX
Room No. 146-J, North Block
New Delhi,22nd June, 2021
To
All Principal Chief Commissioners/
Chief Commissioners of Customs & GST
All Principal Director Generals/
Director Generals of Customs & GST
Madam/Sir,
Subject:
Applicability of Central Excise exemption on Ethanol/ Methanol blended Petrol,
and High-speed diesel blended with bio-diesel, when blending is done within the
refinery-reg.
References have been received seeking clarification on
applicability of exemption from Basic Excise duty and other cesses, under
different notifications, in case the blending of motor spirit (commonly known as
petrol) and ethanol or methanol, is done within the refinery.
2. The
matter has been examined. Exemption from Basic Excise Duty, Road and
Infrastructure cess (RIC), Special Additional Excise Duty (SAED) and
Agricultural and Infrastructure and Development Cess (AIDC), in all such
notifications, on the blended fuel, is subject to the following conditions:
i. Appropriate duties of excise have been paid on portion of motor spirit
(commonly known as petrol) which is a specified percentage of the blend (as
specified in the relevant notification);
ii. Appropriate GST (Central
tax, State tax, Union Territory Tax or integrated tax) have been paid on portion
of ethanol or methanol, as the case may be, which is which is a specified
percentage of the blend (specified in the relevant notification) and
iii.
Ethanol/Methanol blended petrol is conforming to the Bureau of Indian Standards
Specification, as specified in the relevant notification.
3. Similar
exemptions existed in the pre-GST regime also. In this regard, the Hon’ble
Punjab and Haryana High Court in the case of Commissioner of Central Excise,
Rohtak vs. Indian Oil Corporation Ltd {2015 (321) E.L.T. 571 (P & H)}, in the
case of similar exemption notification No.6/2002-Central Excise dated 1-3-2002
and the notification No. 15/2003-C.E., dated 1-3-2003, held in favour of the
respondent as under:
As noticed, the benefit is given to the final
product, i.e., 5% ethanol doped petrol (EBP) which is a blend of 95% motor
spirit (petrol) and 5% ethanol. Both the said products were being stored in the
premises of the refinery of the assessee and on the ethanol, the excise duty had
been paid whereas on the motor spirit, the excise duty was not paid at the time
of mixing the two, before the EBP was taken out from the factory/refinery
premises. However, it is common case of the parties that as per Rule 8, the said
duty has been paid on motor spirit (petrol) also, within the required period by
5th day of the following month. Once that is so and the duty has also been paid,
it would be too technical a default to penalise the Corporation on the ground
that the duty should have been paid prior to the mixing and therefore, deny it
the benefit of exemption.
4. No appeal has been filed by the Department
against the above order.
5. Thus, it is clarified that the notifications
grant exemption to the ethanol/ methanol blended petrol provided that the
Central Excise duty (including applicable cesses) is paid on motor spirit
(petrol) and GST is paid on ethanol/methanol, used in producing the blended
fuel. Therefore, relevant conditions of notification get satisfied if the
refinery that produces blended fuel by blending motor spirit (petrol) captively
produced and GST paid ethanol/methanol, pays excise duty on petrol so used for
blending, even if such duty is paid for blending, i.e., at the time of clearance
of Ethanol/ Methanol Blended Petrol from the factory. Accordingly, it is
clarified that the exemption from Central Excise on blended fuel, shall also be
available in case the blending is done within the factory premises, provided
that the assessee pays the required Central excise duty on Motor Spirit
(commonly known as petrol) by the due date (based on removal of the Ethanol/
Methanol blended fuel from the factory). Proper account of such blending and
details of the tax paid on Motor Spirit (petrol) and Ethanol/Methanol, used for
the purpose of blending be maintained by the assessee, for any verification,
including in audit.
6. The above clarification will also be applicable
for High-speed diesel oil blended with alkyl esters of long chain fatty acids
obtained from vegetable oils, commonly known as bio –
7. Trade, industry
and field formations may be suitably informed
8. Difficulty, if any, in
the implementation of this Circular may be brought to the notice of the Board.
Hindi version will follow.
Yours faithfully,
F. No. 341/02/2021-TRU
(Gaurav Singh)
Deputy Secretary (TRU-I)
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