2003 (9) TMI 481 - AT - Central Excise

Summary

Issues Involved:
1. Classification of C4 Raffinate (Return Stream) under the appropriate tariff heading.
2. Applicability of extended period of limitation under Section 11A.
3. Determination of duty liability on C4 Raffinate (Return Stream).

Detailed Analysis:

Classification of C4 Raffinate (Return Stream):
The primary issue revolves around whether C4 Raffinate (Return Stream) should be classified under sub-heading 2711.12 or 2711.19. The appellants argued that C4 Raffinate is a mixture of hydrocarbons and cannot be classified as a specific petroleum gas under sub-heading 2711.12. The Commissioner, however, held that since C4 Raffinate (Return Stream) predominantly contains butylenes, it should be classified under 2711.12, attracting a higher duty rate of 16%.

The Tribunal noted that the C4 Raffinate (Return Stream) comprises butylenes in significant proportions-43.41% Butene-1, 12.16% Iso-Butene, 16.07% T-Butene, and 11.39% C-Butene. According to the Harmonized Commodity Description and Coding System, Chapter sub-heading 2711.12 specifically mentions butylenes, whereas sub-heading 2711.19 covers other liquefied hydrocarbons. The Tribunal emphasized that classification should be based on the constituent providing the material its essential character and use.

Applicability of Extended Period of Limitation:
The appellants contended that the extended period of limitation under Section 11A could not be invoked as there was no suppression of facts with an intent to evade duty. The Commissioner, however, relied on the amendment to Section 11A(1) by the Finance Act, 2000, to hold that the extended period could be invoked even if the classification had been approved and the department was aware of the facts.

Determination of Duty Liability:
The Commissioner confirmed the demand for differential duty of Rs. 94,87,425/- on the grounds that C4 Raffinate (Return Stream) should be classified under sub-heading 2711.12. The Tribunal, however, referred to a previous decision in the case of M/s. Gujarat Petrosynthetic Ltd., where it was held that C4 Raffinate returned after the polymerization process should be considered the same as the incoming C4 Raffinate. This precedent suggests that the C4 Raffinate (Return Stream) should not be reclassified differently from the incoming stream.

The Tribunal found that the classification of the incoming C4 Raffinate Stream by M/s. IPCL is under reconsideration by the department. Therefore, it would be premature to reclassify the return stream and recover duty based on that classification.

Conclusion:
The Tribunal set aside the Commissioner's order and remanded the matter back to the original authority. The original authority is directed to await the final classification of the incoming C4 Raffinate Stream and then decide on the duty adjustments, if required, by following the provisions of Rule 57E. The Tribunal kept the issue of classification and limitation open, to be decided afresh after the classification of the incoming stream is finalized.

Final Order:
The appeal is allowed as a remand to the original authority for reconsideration in light of the final classification of the incoming C4 Raffinate Stream.