CIR NO.685/01/2003-CX, DT. 02/01/2003

Blending of Petrol with Ethanol - excise duty exemption - regarding

In this year"s budget, the excise duty on motor spirit (commonly known as petrol) was reduced from 90% to 32% and a surcharge of Rs.6/- per litre was imposed. However, the surcharge on motor spirit, intended for use in the manufacture of 5% ethanol blended petrol, will now be Rs. 5.70 per litre. Notification Nos. 62/2002-CE, 63/2002-CE and 64/2002-CE all dated 31.12.2002 have now been issued to implement this decision of the Government These notifications also define the term "5% ethanol blended petrol" as a blend, by volume, consisting of 95% petrol and 5% ethanol, falling under heading No.27.10 conforming to Bureau of Indian Standards (BIS) specification 2796.

2. Notification No. 62/2002-Central Excise, dated 31-12-2002 seeks to amend:

(i) Notification No.6/2002-Central Excise dated 01-03-2002 so as to exempt 5% ethanol blended petrol (manufactured from blending of motor spirit (commonly known as petrol) and ethanol, on which the appropriate duties of excise have been paid), falling under Chapter heading No. 27.10 of the First Schedule to the Central Excise Tariff Act, 1985 from the whole of duties of central excise specified in the First and Second Schedules of the Central Excise Tariff Act,1985.

(ii) Notification No.28/2002-Central Excise dated 13.05.2002 so as to

(a) prescribe a concessional rate of Rs. 5.70 per liter of Special Additional Excise Duty on Motor Spirit (commonly known as petrol), when intended for use in manufacture of 5% ethanol blended petrol, and

(b) exempt 5% ethanol blended petrol (manufactured from blending of motor spirit (commonly known as petrol) and ethanol, on which the appropriate duties of excise have been paid), from the whole of the Special Additional Excise Duty leviable thereon.

3. Notification No. 63/2002-Central Excise, dated 31-12-2002 seeks to exempt ethanol blended petrol (manufactured from blending of motor spirit (commonly known as petrol) and ethanol, on which the appropriate duties of excise have been paid), from the whole of the Additional Duty of Excise leviable thereon.

4. Notification No. 64/2002-Central Excise, dated 31-12-2002 seeks to exempt Motor Spirit (commonly known as petrol), falling under Chapter heading 27.10 of the first and Second Schedules of the Central Excise Tariff Act, 1985, when intended for use in the manufacture of 5% ethanol blended petrol, from so much of the duty of excise leviable thereon under the said Schedules, as is in excess of the duty leviable on motor spirit sold by the manufacturer to an independent buyer.

5. These notifications are effective upto and inclusive of 28th February 2003. You are requested to apprise your officers suitably to ensure smooth implementation of these notifications. Copies of these notifications are available on the website www.cbec.gov.in. Problems, if any, faced in the implementation of these notifications may kindly be brought to the notice of the Board.

Sd/-
(Gautam Ray)
Joint Secretary to the Govt. of India

F. No. 356/5/2002-TRU

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