Unknown vs Appearance

(Arising out of Order-in-Appeal No. AT/105 to 107 dated 25.2.2005 passed by Commissioner of Central Excise (Appeals), Mumbai-II)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. S.S. Garg, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Oriental Containers Ltd.

S.P. Thakkar U.M. Kini

Vs. Commissioner of Central Excise, Mumbai

AND

Commissioner of Central Excise, Mumbai

Vs.

Oriental Containers Ltd.

S.P. Thakkar U.M. Kini

Appearance:

Shri Vishal Agarwal, Advocate, for assessee 1 Shri Roshil Nichani, Advocate, for assessee 2 None for assessee 3 Shri N.N. Prabhudesai, Superintendent (AR), for respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing: 11.8.2015 Date of Decision: 19.8.2015

ORDER NO

Per: P.K. Jain

Brief facts of the case are that the assessee was manufacturing inter alia two items viz. Iso Pentane and Heptane. The assessee was classifying the two items under Heading 2710.90. One of the items viz. Iso Pentane was captively consumed as a fuel by burning the same. The second item viz. Heptane was being cleared on payment of duty under Heading 2710.90. Revenues case is that both the items are classifiable under Heading 2710.13 and are chargeable to duty accordingly. On the basis of an intelligence about the mis-classification of the goods, DGCI officials investigated and in the process, recorded certain statements and also got the sample of Heptane tested from Deputy Chief Chemist. Certain test reports were also recovered from the assessee pertaining to their goods and after investigation, a show cause notice dated 25.6.2001 was issued. After receiving the reply from the assessee, the same was adjudicated by the Additional Commissioner vide order dated 19.4.2004 wherein he confirmed the duty demanded and appropriated part of the duty deposited by the assessee during investigation, imposed penalty under Section 11AC and also imposed equal amount of penalty on Shri U.M. Kini, Director, and Shri S.P. Thakkar, General Manager, under Rule 209A of the erstwhile Central Excise Rules and also ordered recovery of interest under Section 11AB. Aggrieved by the said order, the assessee filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) vide the impugned order dated 25.2.2005 remanded the matter back to the lower authority with the direction to draw and get the samples of the product properly tested and redetermine the classification of the product and re-adjudicate the matter after affording proper opportunity to the assessee to present their case.

2. Aggrieved by the said order, both the assessee as also the Revenue are in appeal before this Tribunal.

3. The main grounds of appeal by the Revenue is that the factory has stopped manufacturing Heptane and Iso Pentane Mix and, therefore, no purpose is served in remanding the case to the adjudicating authority to draw samples of the goods which are not being manufactured by them as on date. It was further contended by the Revenue in their grounds of appeal that the show cause notice already provides sufficient evidences to decide the classification of the goods. The assessee has also filed the appeal on the grounds that the Commissioner (Appeals) ought to have decided the case himself instead of remanding the case to the lower authority for redetermination of the classification of Heptane and Iso Pentane Mix, since all the relevant materials for determining the classification were given by the assessee and were available with the Commissioner (Appeals).

4. Learned counsel for the assessee submits that Heading 27.10 covers various petroleum oils and oils obtained from bituminous minerals other than crude and the first sub-heading covers motor spirit, that is to say, any hydrocarbon oil which has its flash point below 25:C, and which either by itself or in admixture with any other substance, is suitable for use as a fuel in spark ignition engines. He further submitted that the said sub-heading is further divided into 2710.11, 2710.12, 2710.13, which covers special boiling point spirits (other than Benzene-Toluol) etc. with nominal boiling point range 55-115:C specified in that sub-heading etc. He submitted that the main sub-heading corresponding to 2710.13 itself will indicate that there are two requirements. The first requirement is that the flash point should be below 25:C and the second is that the hydrocarbon oil either by itself or in admixture with any other substance is suitable for use as fuel in spark ignition engines. He further submitted that the samples were drawn and were sent to the Deputy Chief Chemist and the Deputy Chief Chemist has confirmed only the first characteristics i.e. hydrocarbon oil has its flash point below 25:C. As far as the second characteristics is concerned, i.e. whether it is suitable for use as fuel in its spark ignition engine or not, has not been tested by the Deputy Chief Chemist and he has, in turn, suggested that the same should be got determined. His submission was that the department has not bothered to get the second characteristics determined from any source and under the circumstances, the department cannot classify the product under 2710.13. He further submitted that the burden of classifying the goods under a particular heading is on the Revenue, which has not been discharged by them. He further submitted the following case laws in support of his contention that since the Revenue has not been able to satisfy the second criteria, their appeal should have been allowed by the Commissioner (Appeals).

(i) Jagdamba Petroleum P. Ltd. vs. CCE reported in 2004 (163) ELT 88 (T);

(ii) CCE vs. Jagdamba Petroleum P. Ltd. reported in 2007 (212) ELT A112 (SC);

(iii) Indu Nissan Oxo Chem Industries Ltd. vs. CCE reported in 1998 (101) ELT 201 (T);

(iv) Ram Remedies Pvt. Ltd. vs. CCE reported in 2010 (254) ELT 170;

(v) CCE vs. Viman Chemicals P. Ltd. reported in 2005 (179) ELT 208 (T);

(vi) Silverchem Industries Pvt. Ltd. vs. CCE reported in 2003 (155) ELT 204 (T);

(vii) Indian Oil Corpn. Ltd. vs. CCE 1990 (45) ELT 134 (T);

(viii) CCE vs. Sun Coats & Chemicals (I) Ltd. reported in 2008 (231) ELT 531 (T),

(ix) Avani Petrochem Ltd. vs. CCE reported in 2010 (249) ELT 117 (T).

5. Learned AR, on the other hand, submitted that the first of the foremost thing is that the unit has stopped producing the goods long back and, therefore, at this stage it is not possible to draw the samples and determine the suitability as fuel in spark ignition engines. He further submitted that this is not even required as there are a large number of evidences already available in the show cause notice by which it is possible to determine the classification of the goods. The Commissioner (Appeals) could have and should have decided the matter based upon these evidences. He also took us through the grounds of appeal and submitted that the Commissioner (Appeals) has relied upon the decision of the Honble Supreme Court in the case of UOI vs. Garware Nylon reported in 1996 (87) ELT 12 (SC) but has ignored the observation of the Honble Supreme Court in para 15 of that very judgment. He submitted that in the present case there is substantive evidence in the form of statement dated 8.2.2001 and 2.3.2001 of Shri S.P. Thakkar, General Manager of the assessee, statement dated 8.2.2001 of Shri J.A. Koli, Superintendent of Quality Control of the assessee, write up of process description submitted by the assessee and the test reports which have been relied upon in the show cause notice and also placed before the first adjudicating authority. He further submitted that none of these statements have been retracted and the assessee themselves were convinced during investigation and had paid the duty amount of Rs.9,50,932/- voluntarily without any protest. Learned AR also submitted that reliance on the judgment in the case of CCE vs. J.L. Morison reported in 1986 (25) ELT 660 (Kar.) is misplaced, as in that case no test reports to identify the contents of the goods were available and there were no documentary evidences. However, in the present case, these details are available. Learned AR also submitted various case laws mentioned in the grounds of appeal to support the departments contention that on the basis of the statements and the available evidences, it is possible to decide the issue and the matter should have been decided by the Commissioner (Appeals) rather than remanding it for retest when the product itself is not being manufactured.

6. We have considered the rival submissions. Heading 27.10 as it stood at the relevant time read as under:-

27.10 Petroleum oils and oils obtained from bituminous minerals, other than crude; Preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations

- Motor spirit, that is to say, any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 250C, and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines :

2710.11 -- Special boiling point spirits (other than Ben- 16% zene-Toluol) with nominal boiling point range 55-1150C

2710.12 -- Special boiling point spirits (other than Benzene, Ben- 16% zol,Toluene and Toluol) with nominal boiling point range 63-700C

2710.13 -- Other special boiling point spirits (other than Benzene, Benzol, Toluene and Toluol) 16%

2710.L4  Naphtha 16% 2710.15 - Natural Gasoline Liquid 16% 2710.19 Other 16% 1710.90  Other 16%

It would be seen from the above heading that Heading 2710.13 is a specific heading covering specific goods while Heading 2710.90 is a residuary heading for Heading 27.10. The goods can be classified under Heading 2710.90 only if these are not classifiable under the first sub-heading i.e. Motor spirit, that is to say, any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 250C, and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines.

7. We find that both the Revenue as also the assessee in their grounds of appeal have urged that the Commissioner (Appeals) should have decided himself instead of remanding the matter. Revenues contention is that the main terms of remand is to get the goods retested, but the goods are not being manufactured any more and, therefore, neither the sample can be drawn nor the goods can be retested. On the other hand, the assessee feels that based upon the available information, the matter is in their favour. Keeping in view the fact that the samples of the goods are not available and it is not possible to retest the goods but the only solution left is to decide the case based upon whatever evidences are available on record. Since the Commissioner (Appeals) has not examined all the evidences particularly the test reports of the assessee themselves, statements made by various personnel of the assessee and other related evidences, we consider it appropriate that we set aside the order of the Commissioner (Appeals) and remand the matter to the Commissioner (Appeals) to re-adjudicate the matter based upon the evidences already available and which form part of the show cause notice. We also note that the assessee has also disputed invocation of the extended period of limitation on the grounds that they were filing the classification declaration every year and no objection was raised by the Revenue. Since no finding has been given by the Commissioner (Appeals) even on this issue, the Commissioner (Appeals) is directed to examine the issue relating to invocation of the extended period also.

8. In the result, all the appeals are allowed by way of remand to the Commissioner (Appeals) who would decide the matter based upon the available evidences and all the issues are kept open from both the sides and both the sides will be free to advance arguments on various issues on merits, limitation or any other legal points.

9. All the appeals are disposed of in above terms.

(Pronounced in Court on 19.8.2015)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

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