Custom, Excise & Service Tax Tribunal
Bharat Petroleum Corporation Limited vs Bhopal on 6 February, 2026
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
EXCISE APPEAL NO. 50292 OF 2025
(Arising out of Order-in-Original No. 03/Pr.Commr/C.Ex./BPL/2024-25 dated 27.11.2024
passed by the Principal Commissioner of CGST & Central Excise, Bhopal)
Bharat Petroleum Corporation .....Appellant
Limited
Refinery, Administrative Building,
Refinery Complex,
Agasod, Sagar (M.P.) - 470124
VERSUS
Principal Commissioner, .....Respondent
CGST & Central Excise
35-C, GST Bhavan, Administrative Area,
Arera Hills, Bhopal - 462011
APPEARANCE:
Shri Gopal Mundhra, Advocate for the Appellant
Shri M.K. Jaiswal, Authorized Representative for the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)
Date of Hearing: 07.08.2025
Date of Decision: 06.02.2026
FINAL ORDER NO. 50226/2026
JUSTICE DILIP GUPTA:
This appeal has been filed by Bharat Petroleum Corporation Limited1
to assail the order dated 27.11.2024 passed by the Principal
Commissioner, CGST & Central Excise, Bhopal 2 that confirms the proposal
in the show cause notice for levy of central excise duty on Aviation Turbine
Fuel 3 that was cleared without payment of excise duty for the period from
July, 2022 to March, 2023. The said duty has also been ordered to be
1. the appellant
2. the Principal Commissioner
3. ATF
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recovered from the appellant under section 11A of the Central Excise Act,
1944 4. The order also directs for payment of interest under section 11AA
of the Central Excise Act and penalty under section 11AC(1)(a) of the
Central Excise Act.
2. The appellant is engaged in the manufacture and clearance of ATF
classified under Chapter 27 of the Central Excise Tariff Act, 1985 5. For
operational reasons, the ATF intended for supply as fuel to foreign going
aircraft cannot be dispatched directly from the refinery to such aircrafts. It
is, therefore, cleared to various warehouse facilities across India, all of
which are separately registered under rule 9 of the Central Excise Rules,
2002 6 or the Central Excise Rules, 2017 7. These warehouses store ATF
and upon requisition from airlines, dispatch it to the foreign going aircraft
through mobile tankers.
3. According to the appellant, the procedural framework adopted by
the appellant is that the concerned warehouse obtains Form CT-2
certificate from the jurisdictional excise authority and forwards the same
to the appellant. The refinery of the appellant then clears ATF to the
warehouse without payment of excise duty following the procedure
prescribed under Circular No. 804/1/2005-CX dated 04.01.2005. This
Circular states that the facility of removal of petroleum products without
payment of duty for export warehousing continues to be available through
Notification No. 46/2001-CE (N.T.) dated 26.06.2001. Accordingly, ATF
was cleared without the payment of excise duty on the strength of Form
CT-2. Subsequently, for supply to foreign going aircraft, the warehouse
clears the ATF without payment of duty under the cover of Form ARE-3,
4. the Central Excise Act
5. the Central Excise Tariff Act
6. the 2002 Rules
7. the 2017 Rules
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which is subsequently submitted to the excise offices having jurisdiction
over the warehouse as well as the appellant in due course.
4. During the period from July, 2022 to March, 2023, an audit under
section 65 of the Central Goods and Services Tax Act, 2017 was conducted
at the refinery of the appellant. It was alleged that pursuant to an
amendment to rule 19 of the 2017 Rules by Notification No. 02/2022
dated 30.06.2022, ATF was excluded from the facility of removal to
warehouse without payment of duty and so excise duty became payable at
the point of clearance from the refinery for eventual supply as aviation fuel
to foreign going aircraft.
5. A show cause notice dated 31.07.2024 was, accordingly, issued to
the appellant alleging that during the period from July, 2022 to March,
2023, the appellant had cleared ATF without payment of central excise
duty amounting to Rs. 256,51,79,495/- to various warehouses registered
under rule 9 of the 2002 Rules or the 2017 Rules. The appellant was called
upon to show cause as to why central excise duty should not be demanded
and recovered under section 11A of the Central Excise Act and interest at
appropriate rate should not be demanded and penalty should not be
imposed upon the appellant. The main allegations made in the show cause
notice against the appellant are:
(i) Rule 19 of the 2017 Rules that was amended by Notification
No. 02/2022 dated 30.06.2022, excluded ATF from facility of
duty-free removal to warehouses;
(ii) The warehousing facility as provided under Notification dated
26.06.2001 was restricted to excisable goods which were
exported under bond and the same is not available for ATF
post-amendment;
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(iii) Notification No. 08/2022 dated 30.06.2022 applies only to
direct supplies from refinery to aircraft and not through
warehouses; and
(iv) The appellant had cleared ATF for exports without payment
of applicable excise duty and, therefore, is liable to penalty
under section 11AC(1)(a) of the Central Excise Act.
6. The appellant filed a detail reply to the show cause notice and
denied the allegations made therein.
7. However, the Principal Commissioner, by order dated 27.11.2024,
confirmed the entire duty demand as proposed in the show cause notice
with interest and penalty was also imposed under section 11AC(1)(a) of
the Central Excise Act. The reasons assigned for confirming the order are:
"30. I have gone through the SCN, relied upon
documents, written submission of noticee and record of
personal hearing. The issues to be decided by me are
as follows:
(i) Whether the noticee was entitled to duty free
clearance from the refinery/factory?
(ii) Whether the noticee was entitled to clear Aviation
Turbine Fuel (herein referred to as ATF) without
payment of duty from the factory to the warehouse?
(iii) Whether interest can be demanded from the
noticee?
(iv) Whether penalty can be imposed upon them under
section 11AC(1)(a) of the Central Excise Act?
31. Regarding point no. 1, the duty free
clearances can be done under Rule 19 or under an
exemption notification. Rule 19 of Central Excise Rules
2017 relates to clearance of excisable goods without
payment of duty from a factory of the producer or the
manufacturer or the warehouse or any other premises.
The Rule 19 was amended vide Notification No.
02/2002 dated 30.06.2022 by which in Rule 19,
the following proviso was inserted, namely:-
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"Provided that nothing contained in this Rule shall apply
to Motor Spirit, commonly known as petrol, High Speed
diesel oil and Aviation Turbine Fuel."
Thus the clearance of Aviation Turbine Fuel
without payment of duty shall not be allowed
under Rule 19.
31.1. Coming to exemption notification, vide
Notification 08/2002 dated 30.06.2022 as
amended vide corrigendum dated 07.07.2022, the
ATF was exempted from basic excise duty when it
is cleared for exports or supplied as fuel to the
foreign going Aircraft. In the present case, the
ATF was never cleared from the refinery directly
to the foreign going Aircraft. Hence, this benefit
to notification shall not be available and the
noticee will have to pay full duty on clearance of
goods from the refinery.
31.2. The noticee is clearing the goods without
payment of duty to its various warehouses. The
noticee has said that the benefit of notification
No. 08/2022 of clearance without payment of
duty shall be available on all legs of transaction
i.e. from refinery to warehouse and from
warehouse to foreign going aircraft.
I note that this is not written anywhere in the
notification. The notification is to be construed
strictly and one can not apply his interpretation
on it.
32. Coming to point no. 2 whether the noticee
is entitled to send goods without payment of duty to its
warehouse under rule 20 of Central Excise (no. 2)
rules, 2001.
*****
32.1 Vide Notification No. 47/2001 - CE (NT) dated 26.06.2001, the Central Government extended the facility of removal of specified excisable goods from the factory of production to a warehouse, or from one warehouse to another warehouse without payment of duty. ***** 6 E/50292/2025 ***** Excisable goods mentioned at Sl. No. 1 of the aforesaid Notification included ATF falling under Chapter Heading 2710 of the First Schedule to the Central Excise Tariff Act, 1985.
32.2. Notification No. 47/2001-CE (NT) dated 26.06.2001 was superseded vide Notification No. 17/2004-CE (NT) dated 04.09.2004 with effect from 06.09.2004. ***** ***** From comparison of Notification No. 47/2001-CE (NT) dated 26.06.2001 and successor Notification No. 17/2004-CE (NT) dated 04.09.2004, it is evident that Sl. No. 1 of Notification No. 47/2001- CE (NT) dated 26.06.2001 (which included ATF) was removed. Thus, the facility of removal of ATF without payment of duty from the factory of production to a warehouse or from one warehouse to another warehouse was withdrawn with effect from 09.09.2004.
*****
34. The noticee has also stated that under Rule 16(3) of Central Excise Rules 2017, the responsibility for payment of duty on the goods that are removed from the factory of production to a warehouse shall be upon the consignee. In this regard, I note that both the refinery/factory and the warehouses belong to M/s Bharat Petroleum Corporation Ltd. Since, the Company is the same it does not matter whether the duty is demanded from the BPCL refinery or BPCL warehouse."
(emphasis supplied)
8. This appeal has been filed to assail this order of the Principal Commissioner.
9. Shri Gopal Mundhra, learned counsel for the appellant made the following submissions:
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(i) The appellant is entitled to exemption under Notification No. 08/2022 dated 30.06.2022, as amended by Corrigendum dated 07.07.2022;
(ii) It is an admitted position that the goods have been ultimately supplied as fuel to foreign going aircraft.
Therefore, the interpretation that the exemption is available only when the supply is made directly from the refinery to the foreign going aircraft, amounts to reading conditions stipulated under the Notification No. 08/2022 dated 30.06.2022, which do not exist;
(iii) Since direct co-relation is established between ATF removed from refinery and ATF supplied as fuel for foreign going aircraft, exemption under Notification No. 08/2022 dated 30.06.2022 cannot be denied to the appellant;
(iv) The supply of ATF to foreign going aircraft is exempt from excise duty under treaty obligations of India and statutory framework;
(v) The show cause notice dated 31.07.2024 is without jurisdiction to the extent the same has been issued alleging incorrect availment of exemption under the Notification No. 08/2022 dated 30.06.2022 to clearances made by separately registered warehouses and not the refinery. The warehouses were independently registered under rule 9 of the 2017 Rules and are distinct assesses law. In such a case, any alleged procedural irregularity or exemption violation is attributable, if at all, to the consignee warehouse, and not the consignore refinery;
(vi) The impugned order travels beyond the scope of the show cause notice and is liable to be set aside; 8
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(vii) Statutory provision laying down an obligation is construed as not applying to a case where performance is impossible; and
(viii) Levy of penalty under section 11AC(1)(a) of the Central Excise Act or under section 11AA of the Central Excise Act upon the appellant is not justified.
10. Shri M.K. Jaiswal, learned authorized representative appearing for the department, however, supported the impugned order and made the following submissions:
(i) The contention of the appellant regarding applicability of Notification No. 46/2001 dated 26.06.2001 is misconceived.
This Notification allows removal of excisable goods without payment of duty from the factory of production to a warehouse for the purpose of subsequent export under provisions of rule 19 of the 2017 Rules. When the rule 19 itself is not applicable for ATF by virtue of the proviso added to the rule 19, the Notification automatically becomes inapplicable in the case of the appellant;
(ii) The appellant is not correct in contending that amendment to rule 19 does not impact rule 20 or Notification No. 46/2001. Two Notifications were issued under rule 20, namely, Notification No. 46/2001 dated 26.06.2001 which extends facility of removal of goods to warehouse and consequent export under rule 19 and Notification No. 47/2001 dated 26.06.2001 which extends facility of movement of goods specified therein from one warehouse to another without payment of duty. The former Notification dated 26.06.2001 is not applicable in case of the appellant by virtue of the proviso added to the rule 19 and the later Notification is also not applicable in case of the appellant as 9 E/50292/2025 ATF is not a specified good under the said Notification. Therefore, the appellant was required to remove the goods on payment of central excise duty but it failed to do so;
(iii) The contention of the appellant that the exemption claimed by them under Notification No. 08/2022 is justified is incorrect. The said Notification exempts ATF supplied as fuel to foreign going aircraft and this Notification is applicable when the goods are cleared from warehouse for supply to foreign going aircraft. This Notification will not be applicable when the goods are cleared from place of production to warehouse which is separately registered under Central Excise Law;
(iv) The contention of the appellant regarding jurisdictional overreach by show cause notice issuing authority is misconceived and incorrect as the goods were cleared by the refinery and on clearance of goods from refinery, it was the responsibility of the refinery unit to correctly pay the duty. Responsibility of warehouse unit for payment of duty arises at the time of clearance of goods from warehouse; and
(v) The contention of the appellant that duty liability lies on warehouse under rule 20(3) is misconceived and incorrect. This provision is meant for payment of duty after arrival of goods in the warehouse and subsequent clearance from the warehouse.
11. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.
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12. In order to appreciate the contentions, it would be appropriate to refer to the relevant provisions of the Rules, the Notifications and Circulars issued from time to time.
13. On 07.12.1994, Convention on International Civil Aviation was held at Chicago. Article 24 of the Convention mandates exemption from customs and excise duties for fuel supplied to foreign aircraft operating international flights.
14. Rule 9 of the 2002 Rules deals with registration and it provides that every person who produces, manufactures, carries on trade, holds private store-room or warehouse or otherwise uses excisable goods shall get registered. Rule 9 of the 2017 Rules is identical and it further provides that a registration obtained under rule 9 of the 2002 Rules shall be deemed to be valid as the registration made under the 2017 Rules.
15. Rule 18 of the 2002 Rules deals with rebate of duty. It provides that where any goods are exported, the Central Government may, by Notification, grant rebate of duty paid on such excisable goods. The Explanation provides that for the purposes of this rule "export" means taking goods out of India to a place outside India and includes goods supplied to a foreign going aircraft. Rule 18 of the 2017 Rules is identical.
16. Rule 19 of the 2002 Rules deals with export without payment of duty and is reproduced below:
"19. Export without payment of duty.-
(1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Principal Commissioner or Commissioner, as the case may be.
(2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer 11 E/50292/2025 or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Principal Commissioner or Commissioner, as the case may be.
(3) The export under sub-rule (1) or sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board."
17. Rule 19 of the 2017 Rules is identical.
18. Rule 20 of the 2002 Rules deals with warehousing provisions and is reproduced below:
"20. Warehousing provisions.-
(1) The Central Government may by notification, extend the facility of removal of any excisable goods from the factory of production to a warehouse, or from one warehouse to another warehouse without payment of duty.
(2) The facility under sub-rule (1) shall be available subject to such conditions, including penalty and interest, limitations, including limitation with respect to the period for which the goods may remain in the warehouse, and safeguards and procedure, including in the matters relating to dispatch, movement, receipt, accountal and disposal of such goods, as may be specified by the Board.
(3) The responsibility for payment of duty on the goods that are removed from the factory of production to a warehouse or from one warehouse to another warehouse shall be upon the consignee.
(4) If the goods dispatched for warehousing or re-
warehousing are not received in the warehouse, the responsibility for payment of duty shall be upon the consignor."
19. Identical provision exists in rule 16 of the 2017 Rules. 12
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20. Notification No. 46/2001 dated 26.06.2001 was issued allowing manufacturer to remove excisable goods without payment of duty to export warehouses for intended export, including petroleum products like ATF.
21. It needs to be noted that a Notification No. 47/2001 dated 26.06.2001 was issued under sub-rule (1) of rule 20 of the Central Excise Rules, 2001 which is identical to rule 20 of the 2002 Rules. The Central Government extended the facility of removal of all excisable goods specified from the factory of production to a warehouse, or from one warehouse to another warehouse without payment of duty. The relevant portion of this Notification dated 26.06.2001 is reproduced below:
Notification No. 47/2001-Central Excise (N.T.) In exercise of the powers conferred by sub-rule (1) of rule 20 of the Central Excise (No.2) Rules, 2001, the Central Government hereby extends the facility of removal of all excisable goods specified in column (2) of the Table below from the factory of production to a warehouse, or from one warehouse to another warehouse without payment of duty.
TABLE
Sl. Excisable goods
No.
1. Goods falling under Heading Nos. 27.07,
27.10, 27.11, 27.12, 27.13 (except Sub-
heading No.2713.12), 27.14 and 27.15, of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);
22. Circular No. 579/16/2001 dated 26.06.2001 was issued clarifying the export procedure governing the movement of goods to which warehousing provisions have been extended by the Central Government by Notification No. 47/2001 date 26.06.2001. It clarified the export 13 E/50292/2025 procedure under ARE-1/ARE-3, including movement of goods through intermediate warehouses and use of Form CT-2.
23. Circular No. 581/18/2001 dated 29.06.2001 was also issued by the Central Government clarifying conditions for export under bond from warehouse including evidentiary requirement and documentary co-relation between removal and export.
24. Notification No. 17/2004 dated 04.09.2004 was issued by the Central Government amending Notification No. 47/2001 dated 26.06.2001 by withdrawing the facility of warehouse-to-warehouse transfers of petroleum products like ATF.
25. Circular No. 798/31/2004 dated 08.09.2004 was issued clarifying that even after restriction on petroleum products under Notification No. 47/2001, warehousing for export on such products remains valid under Notification No. 46/2001. The relevant portion of the Circular is reproduced below:
"CIR NO. 798/31/2004-CX. DT. 08/09/2004 Export Warehousing Facility to petroleum products I am directed to say that as you are aware that the facility of removal of petroleum products without payment of duty from the factory of production to a warehouse or from one warehouse to another warehouse has been withdrawn w.e.f 6th September, 2004 vide notification No. 17/2004-CE (N.T.) dated 4th September, 2004. However, the facility of removal of petroleum products without payment of duty for export warehousing continues to be available vide notification No. 46/2001-CE (N.T.) dated 26th June, 2001. Board vide Circular No. 581/18/2001-CX dated 29th June, 2001 has interalia, specified conditions, procedures, class of exporters and places of warehouses under sub-14
E/50292/2025 rule (2) of rule 20 of Central Excise Rules, 2002 for warehousing of excisable goods for the purpose of export.
2. In sub-para (1) and sub-para (2) of para 2 of the said Circular, Board has specified the categories of exporters to whom the said facility shall be applicable and the places where the export warehouses can be established and registered. Consequent to withdrawal of warehousing facility to petroleum products and to take care of export of petroleum products without payment of duty under bond, Board has decided to extend this facility to all exporters of petroleum products and without any restrictions for places where the export warehouses can be established and registered. In other words, export of petroleum products through export warehouses can be undertaken by any exporter and such warehouses can be established in any part of the country. Accordingly, after sub-para (2) of para 2 of the said circular, the following sub-para is inserted,-.
"(3) The facility under this notification shall be applicable to all exporters for petroleum products. The warehouses for the purpose of export of petroleum products falling under Chapter-27 of the First Schedule to the Central Excise Tariff Act, 1985 may be established and registered at any place within the territory of India."
3. The existing warehouses, wherever required, may be allowed to be converted to export warehouses. The technical requirements of such conversion may be completed immediately without affecting in any way the export of petroleum products. Jurisdictional Commissioners of Central Excise may facilitate the registration and establishment of new export warehouses for petroleum products as and when requested."
(emphasis supplied) 15 E/50292/2025
26. Circular No. 804/01/2005 dated 04.01.2005 was also issued in view of logistical constraints in directly fueling international flights. It permitted use of intermediate storage tanks registered as bonded warehouses under rule 9 for supply of ATF to foreign going aircraft, provided documentation is maintained.
27. Notification No. 02/2022 dated 30.06.2022 was issued by the Central Government amending rules 18 and 19 of the 2017 Rules. The relevant portion of the Notification is reproduced below:
"2. In the Central Excise Rules, 2017 (hereinafter referred to as the said Rules), in rule 18, before the explanation the following proviso shall be inserted, namely: -
"Provided that nothing contained in this rule shall apply to Motor spirit, commonly known as petrol, High speed diesel oil and Aviation Turbine Fuel."
3. In the said Rules, in rule 19, the following proviso shall be inserted, namely: -
"Provided that nothing contained in this rule shall apply to Motor spirit, commonly known as petrol, Highspeed diesel oil and Aviation Turbine Fuel."
28. At the same time, Notification No. 08/2022 dated 30.06.2022 was issued by the Central Government granting full exemption from basic excise duty on ATF when supplied as fuel to foreign going aircraft. The relevant portion of the Notification, as amended by Corrigendum dated 07.07.2022, is reproduced below:
"G.S.R. 496(E).-- In exercise of the powers conferred by section 5A of the Central Excise Act, 1944 (1 of 1944) read with section 112 of Finance Act, 2018 (13 of 2018) and section 125 of the Finance Act, 2021(13 of 2021), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods of description falling under Column (2) of the Table below from the 16 E/50292/2025 whole of duties in Column (3) of the said Table when such goods are cleared for exports or supplied as fuel to foreign going aircraft TABLE S. Description of Item The Specified Duty No. (1) (2) (3)
1. (i) Motor Spirit (i) Basic Excise Duty commonly known Agricultural as Petrol (ii) Infrastructure
(ii) High Speed Diesel Development Cess
2. Aviation Turbine Fuel Basic Excise Duty (emphasis supplied)
29. It is in the light of aforesaid provisions that the contentions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have to be examined.
30. The period of dispute in the present appeal is from July, 2022 to March, 2023. This period is immediately after the issuance of Notification No. 02/2022 dated 30.06.2022.
31. The issue that arises for consideration in this appeal is whether appellant satisfied the eligibility criteria for availing the exemption under the said Notification dated 30.06.2022.
32. This exemption Notification dated 30.06.2022 grants exemption from basic excise duty on ATF when supplied for export. The corrigendum dated 07.07.2022 clarifies that exemption to ATF would also be available even if it is supplied as a fuel for foreign going aircrafts. Thus, the eligibility criteria for availing exemption under this Notification is that the goods must be ATF and that they must be supplied as fuel to foreign going aircraft. The Notification does not stipulate that the supply must take place directly from the manufacturer to the aircraft.17
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33. The word "supplied" occurring the Notification should be construed to be of wide amplitude and should be interpreted in a practical and purposive manner to include all supplies that culminate to the foreign going aircraft being fueled with ATF.
34. In this connection reliance can be placed on the judgment of the Supreme Court in Assessing Authority-cum-Excise and Taxation Officer, Gurgaon and Another vs. East India Cotton Mfg. Co. Ltd. 8.
35. The provisions of section 8(3)(b) of the Central Goods and Service Tax Act, 2017 came for interpretation before the Supreme Court. Section 8(3)(b) is reproduced below:
"8. (1) Every dealer, who in the course of Inter- State trade or commerce-
(a) sells to the Government any goods; or
(b) sells to a registered dealer other than the Government goods of the description referred to in subsection (3), shall be liable to pay tax under this Act, which shall be three per cent of his turnover.
***** (3) The goods referred to in clause (b) of sub- section (1)-
(a) *****
(b) are goods of class or classes specified in the certificate of the registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power;"
(emphasis supplied)
8. 1981 (7) TMI 205 - Supreme Court 18 E/50292/2025
36. The Excise and Taxation Officer formulated the case against the assessee in the following words:
"The company purchased goods from outside the State of Punjab (now Haryana) on submission of 'C' Forms for the purpose of use in manufacture of goods for sale. But instead of doing so, the company used those purchases partly in manufacturing its own goods for sale and partly for doing job work for other parties. The Company could not use the material concessionally purchased, for the job work as that does not constitute 'sale'."
(emphasis supplied)
37. The assessee contended in reply that neither the terms and conditions of the certificate of registration nor the provisions of section 8 (3) (b) of the Central Act required that the goods purchased by the assessee must be used by it in manufacture or processing of its own goods intended for sale by itself and that it would be sufficient compliance with the requirement of section 8(3)(b) read with the Certificate of Registration even if the goods purchased were used by assessee in manufacture or processing of goods for a third party under a job contract, so long as the manufactured or processed goods were intended for sale by such third party.
38. This contention of the appellant was not accepted by the Excise and Tax Officers and the relevant portion of the judgment of the Supreme Court is reproduced below:
"The question which therefore arises for consideration is as to what is the scope and meaning of the expression "for use.......in the manufacture..........of goods for sale" occurring in section 8 (3) (b) and in the declaration in Form C and Rule 13. Does it mean that the goods manufactured by a registered dealer by using the 19 E/50292/2025 goods purchased against his Certificate of Registration and the declaration in Form C must be intended for sale by him or does it also include a case where goods are manufactured by a registered dealer for the third party under a job contract and the manufactured goods are intended for sale by such third party ? Now it is a well settled rule of interpretation that a statute must be construed according to its plain language and neither should anything be added nor substracted unless there are adequate grounds to justify the inference that the legislature clearly so intended. ***** ***** Now here we find that the expression used by the legislature as also the rule making authority is simpliciter "for use-in the manufacture-of goods for sale" without any addition of words indicating that the sale must be by any particular individual. The legislature has designedly abstained from using any words of limitation indicating that the sale should be by the registered dealer manufacturing goods. It is significant to note that where the legislature wanted to restrict the sale to one by the registered dealer himself, the legislature used the qualifying words "by him" after the words "for resale" in the first sub-clause of section 8(3)(b) indicating clearly that the resale contemplated by that provision is resale by the registered dealer purchasing the goods and by no one else, but while enacting the second sub- clause of section 8(3)(b) the legislature did not qualify the words "for sale" by adding the words "by him". This deliberate omission of the words "by him" after the words "for sale" clearly indicates that the legislature did not intend that the sale of the manufactured goods should be restricted to the registered dealer manufacturing the goods. If the legislature intended that the sale of the manufactured goods should be by the registered dealer manufacturing the goods and by no one else, there is no reason why the words "by him" should have 20 E/50292/2025 been omitted after the words "for sale" when the legislature considered it necessary to introduce those words after the words "for resale" in the first sub-clause of section 8(3)(b). The omission of the words "by him" is clearly deliberate and intentional and it cannot be explained away on any reasonable hypothesis except that the legislature did not intend that the sale should be limited to that by the registered dealer manufacturing the goods. The Court must construe the language of section 8(3)(b) according to its plain words and it cannot write in the section words which are not there. To read the words "by him" after the words "for sale" in section 8(3)(b) would not be construction but judicial paraphrase which is impermissible to the Court. It is also important to note that the word 'use' is followed by the words "by him" clearly indicating that the use of the goods purchased in the manufacture of goods for sale must be by the registered dealer himself but these words are significantly absent after the words "for sale", On a plain grammatical construction, these words govern and qualify only "use" and cannot be projected into the words "for sale". The goods purchased by the registered dealer must be used by him in the manufacture of goods which are intended for sale but such sale need not be by the registered dealer himself: it may be by anyone."
(emphasis supplied)
39. In this connection, it would be pertinent to refer to other decisions which hold that in the absence of word "only" or "exclusively", the benefit of the exemption Notification cannot be denied.
40. In Union of India vs. Tata Iron and Steel Co. Ltd. 9, the Notification of which benefit was claimed granted exemption to duty paid pig iron but duty paid pig iron was also mixed with other non duty paid materials. It is in this context that the Supreme Court held that if the
9. 1977 (1) E.L.T. J61 (S.C.) 21 E/50292/2025 intention of the government was to exclude exemption to duty paid pig iron when mixed with other materials, then the Notification would have used the expression, "only" or "exclusively" or "entirely" in regard to duty paid pig iron but these expressions were not used. Thus, the benefit of the exemption could not have been denied. The relevant portions of the judgment of the Supreme Court are reproduced below:
"9. The respondent based the claim for exemption on Notification No. 30/60, dated 1st March, 1960 issued by the Central Government in terms of Rule 8(1) of the Central Excise Rules, 1944 (hereinafter called the Rules) exempting steel ingots in which duty-paid pig iron is used from so much of the duty leviable thereon as is in excess of Rs. 30/- per ton. By Notification No. 120 of 1960, dated 1, October, 1960, Notification No. 30/60 was amended by substituting the figures and words "29.35 per metric ton" for the words and figures "30 per ton".
10. By Notification No. 75/62, dated 24th April, 1962, the Central Government in exercise of powers conferred by rule 8(1) of the Rules exempted steel ingots falling under Item 26 of the First Schedule to the Act and specified in Column 2 of the Table appended to the notification from so much of the duty of excise leviable thereon as is in excess of duty specified in the corresponding entry in Column 2 of the said Table. In column 2 of the said notification the following description and duty appear:
S. Descritption Duty
No.
1. If produced out of scrap obtained Rs. 30 per
from duty paid pig iron M.T.
2. If produced out of old iron or steel Nil
or scrap obtained from duty paid
steel ingots or products (75/62)
*****
12. Duty was realised from the respondent on steel ingots in the making of which duty-paid pig iron of rejected ingot moulds and bottom stools 22 E/50292/2025 were used along with non-duty paid materials. The respondent claimed exemption in respect of duty-paid pig iron on rejected moulds and bottom stools used in the making of steel ingots. The claim of the respondent for exemption in respect of duty paid pig iron was rejected by the Assistant Collector of Central Excise by his order, dated 29th August, 1965.
13. The respondent filed appeals before the Collector of Central Excise who by order, dated 30th July, 1965 dismissed the respondent's appeals.
14. The respondent thereafter filed a revision petition before the Ministry of Finance under Section 36 of the Act. The Government by an order dated 7th July, 1967 rejected the revision petition of the respondent. The Government held that the respondent was not entitled to any exemption under Notification No. 30/60, dated 1st March, 1960 because remelted scrap obtained from unserviceable casting moulds viz., ingot moulds and bottom stools were used in conjunction with other non-duty paid pig iron in the manufacture of steel ingots.
15. The respondent challenged the orders in the High Court. The High Court quashed the orders of the Revenue Authorities. The High Court held that the Revenue Authorities fell into the error of interpreting Notification No. 30/60 by confining exemption to steel ingots in which "entirely, exclusively or only" duty paid pig iron is used. The High Court held that the words "entirely, exclusively or only" were not used in the notification. The notification exempted steel ingot in which duty-paid pig iron was used. The High Court also held that the notification would have to be interpreted in a manner that the statute would not cast a burden twice over for payment of tax on the tax payer unless the language of this statute is so compellingly certain to that effect.
***** 23 E/50292/2025
23. The High Court rightly held that the contention of the Revenue fails on two broad grounds. First, there cannot be double taxation on the same article. Counsel for the Revenue gave the example of excise duty on motor car, in spite of the fact that there was duty on tyres and duty on metal sheets. The analogy is misplaced. In such cases the duty is on the end product of motor cars as a whole. The duty on tyres and the duty on metal sheets do not enter the area of duty on motor car. Second, Notification No. 30/60 grants exemption to duty-paid pig iron. The High Court rightly said that the Notification does not say that exemption is granted only when duty paid pig iron is used and that the exemption would not be available if duty-paid pig iron is mixed with other non-duty paid materials. If the intention of the Government were to exclude the exemption to duty paid pig iron when mixed with other materials then the notification would have used the expression "only" or "exclusively" or "entirely" in regard to duty-paid pig iron. The object of the notification was to grant relief by exempting duty-paid pig iron."
(emphasis supplied)
41. In M/s. JMK Energy vs. Commissioner of Customs, Delhi 10, the Tribunal held:
"19. The next question is whether the classification of the imported goods under IGST. S. No. 234 of Schedule I of the IGST Notification 1/2017 covers solar power based devices is correct. We find that the notification does not place any restriction of the Customs Tariff Heading and it applies so long as such devices fall under Chapter 84 or 85 of the Customs Tariff. Evidently, the goods falling under 8507 would also be entitled to classification under Schedule I at S. No. 234 if they are solar power based. There can be no manner of doubt that they are solar power based. The reason this classification was not accepted by the adjudicating authority is that they are not SOLELY
10. 2023 (2) TMI 619 - CESTAT New Delhi 24 E/50292/2025 based on solar power and other power can also be used charged the devices. In our considered view, the adjudicating authority has erred in coming to this conclusion because the Notification does not say ―devices based solely on solar power but says ―solar based devices. It does not in any way forbid the alternative sources of power to support them. Simply because there are four other alternative means through which they can be charged, it does not mean that the imported goods are not solar power based devices. Therefore, the imported goods merit classification under 234 of Schedule I of Notification 1/2017. Consequently, the demand for IGST differential duty along with interest cannot be sustained."
(emphasis supplied)
42. In Indian Organic Chemicals vs. Collector of Central Excise, Madras 11, the Tribunal held:
"9. Shri Sachar has also ably argued that the decision of the Supreme Court in the case of Aluminium Corporation of India Limited v. Union of India & others (supra) and Union of India & Others v. Tata Iron & Steel Co. Ltd. (supra) was essentially based on the principle that where the raw material included duty-paid goods, the final product should not be required to pay duty again in respect of the duty-paid raw material content.
But the fact remains that in the course of expression of its views, the Supreme Court had the occasion categorically to opine as to how notifications of the nature as before us should be interpreted and what is the meaning of the word "manufactured out of". It has been said unequivocally that unless the relevant notification specifically provides for it, it is not correct to read such notifications as confining the exemptions to products made "entirely", "exclusively" or "only" from the specified material and that proportionate relief should be given even in those cases where material other than that specified is used.
11. 1988 (35) E.L.T. 535 (Tribunal) 25 E/50292/2025 *****
14. In this connection we may note that in 1980 when Notification No. 44/80-C.E., dated 24-4-1980 was issued it read that in order to claim benefit of exemption under the notification the fibres and tops should have been manufactured exclusively out of wastes. Therefore, the Government, whenever it felt inclined to confer the benefit of exemption on manufactures exclusively out of waste, took care to introduce this concept in issuing the notification itself. This would also give an indication that when no such word is to be found in the notification the intention was not to deny wholly the benefit if the manufacture was not exclusively out of the waste but to grant it pro rata."
(emphasis supplied)
43. In Aravali Ispat Ltd. vs. Collector of Central Excise, Jaipur 12, the Tribunal held:
"4. We have carefully considered the pleas on both sides. We find substantial force in the appellant's plea. Notification 208/83 dated 1.8.83 as it stood before 1.3.84 did not spell out that the iron castings falling under Tariff Item 25 (16) (i) should be manufactured exclusively out of raw materials stated in corresponding entry of col. 2 of the table of that notification. Character of the admixture used for the manufacture of iron castings still remains the scrap of iron or pig iron falling under Tariff Item 25 (3) (i) or 25 (i). The circular of the Government quoted by the learned consultant supports his plea for availment of the said notification.
Adjudicating authority's observation that the circular cannot override the provisions of the notification is no doubt correct but ignores the predominant character of the admixture used for the final product. Notification 208/83 does not
12. 1986 (26) E.L.T. 259 (Tribunal) 26 E/50292/2025 stipulate that the final product must be manufactured wholly or entirely or exclusively out of the raw materials mentioned in col. 2 of the corresponding entry of the table to the said notification. In the absence of these words finding of the adjudicating authority is not tenable in law. We are fortified in this view by Supreme Court's in the case of Union of India and others v. Tata Iron & Steel Company Ltd., Jamshedpur."
(emphasis supplied)
44. The aforesaid decisions of the Tribunal in JMK Energy, Indian Organic Chemicals and Aravali Ispat emphasise that in a case where a Notification does not stipulate that the final product must be manufactured "wholly" or "entirely" or "exclusively" from a particular raw material, the benefit of the Notification should not be denied merely because a material other than that specified is also used in the manufacture of the final product.
45. The aforesaid judgment of the Supreme Court and the decisions of the Tribunal were considered at length by a Division Bench of this Tribunal in RPG Industrial Products P Ltd. vs. Additional Director General (Adjudication), DGGSTI, New Delhi 13 and it was held:
"32. It would, therefore, be more than apparent that the intention in the two Notifications could not have been to restrict the scope of the said Notifications to goods manufactured 'only' or 'exclusively' out of plastic scrap or plastic waste, when such words are not specified in the Notifications."
46. Learned authorized representative appearing for the department also placed reliance upon the judgments of the Supreme Court in Commissioner of Customs (import), Mumbai vs. Dilip Kumar and
13. Excise Appeal No. 50352 of 2021 decided on 25.09.2024 27 E/50292/2025 Company and others 14 and on State of Gujarat vs. Arcelor Mittal Nippon Steel India 15 to contend that grant of benefit of concessional rate of customs duty under the Notification has to be strictly construed and when the text of the Notification is plain and clear, no words can be added or deleted.
47. In the instant case, it is seen that the Notification No. 08/2022 dated 30.06.2022 does not mention that ATF should be directly supplied from the place of manufacture to the foreign going aircraft and it cannot be supplied through the warehouses of the appellant. The only requirement contained in Notification No. 08/2022 is that the fuel must be "supplied as fuel to foreign going aircraft". The Notification does not mention that exemption will be granted to ATF supplied from the place of manufacture "only" when it is supplied from the place of manufacture to the foreign going aircraft.
48. It has, therefore, to be held that the appellant would be entitled to the benefit of the Notification No. 08/2022.
49. The Principal Commissioner has also held that Notification No. 47/2001 dated 26.06.2001 was superseded by Notification No. 17/2004 dated 04.09.2004 w.e.f. 06.09.2004 and so the facility of removal of ATF without payment of duty from the factory of production to a warehouse or one warehouse to another warehouse was withdrawn.
50. In the first instant, the show cause notice issued to the appellant does not refer to this aspect and, therefore, the Principal Commissioner travelled beyond the show cause notice to record this finding. In any view of the matter, the appellant has been held to be entitled to exemption from payment of excise duty on removal of ATF from the factory to the
14. 2018 (361) E.L.T. 577 (S.C.)
15. (2022) 6 SCC 459 28 E/50292/2025 warehouse for supply to ATF to foreign going aircrafts in terms of Notification No. 08/2022 dated 30.06.2022.
51. The impugned order dated 27.11.2024 passed by the Principal Commissioner for recovery of excise duty from the appellant with interest and penalty cannot, therefore, be sustained and is set aside. The appeal is, accordingly, allowed.
(Order pronounced on 06.02.2026) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Shreya