2004 (1) TMI 399 - SC - Central Excise

Whether the product of the Respondents, namely, Pitch Creosote Mixture is to be classified as Tar or as Pitch ? Held that - Appeal allowed. There is a categoric finding by the Assistant Collector as well as the Commissioner (Appeals) that the product was a Pitch . The Tribunal unfortunately does not seem to have noticed this. The Tribunal has proceeded on an erroneous footing that the product remained Tar . That the product is Pitch is also clear from the fact that the Appellants themselves called it as Pitch . Once it is Pitch there was no question of holding that it would fall under Tariff Item 27.06. Partially distilled tar would be Tar which has not yet become Pitch . Once the product becomes Pitch , it is no longer partially distilled tar . Thus the product was correctly classified by the Assistant Collector under Tariff Item 2708.11.

Summary

Issues: Classification of product as "Tar" or "Pitch" under relevant tariff items.

In this judgment, the Supreme Court addressed the issue of classifying a product, "Pitch Creosote Mixture," under the appropriate tariff item as either "Tar" or "Pitch." The Court noted that prior to March 1, 1986, the product fell under Tariff Item 11(5), which covered "tar distilled from coal or lignite and other mineral tars, including partially distilled tars and blends of pitch." The Court referred to a previous case to establish that the product was covered by this item during a specific period and entitled to certain benefits. However, with the amendment of the Central Excise Tariff Act in 1986, separate tariff items were introduced for "Tar" and "Pitch." The Respondents argued for classification under Tariff Item 27.06 as "partially distilled tar," but the Assistant Collector classified it under Tariff Item 2708.11. The Commissioner (Appeals) upheld this decision, but the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) ruled in favor of the Respondents, stating that the product fell under Tariff Item 27.06 due to being a result of partial distillation of tar.

The Tribunal's reasoning emphasized that the product was a result of partial distillation of tar, making it a partially distilled tar, and therefore, it should be classified under Tariff Item 27.06. The Court acknowledged that "Tar" contained various components, including Pitch, and explained that "Pitch" was derived by distillation of Tar, resulting in a different product. The Court emphasized that once a product became "Pitch," it could not be classified as "Tar" under Tariff Item 27.06. The Court highlighted that both the Assistant Collector and the Commissioner (Appeals) had classified the product as "Pitch," which the Tribunal failed to recognize. The Court concluded that since the product was identified as "Pitch," it should be classified under Tariff Item 2708.11, overturning the Tribunal's decision and reinstating the lower authorities' orders.

In conclusion, the Supreme Court allowed the Appeals, setting aside the Tribunal's judgment, and restored the classification of the product as "Pitch" under Tariff Item 2708.11. The Court emphasized the distinction between "Tar" and "Pitch" based on the process of distillation and the characteristics of the final products, ensuring the correct classification under the applicable tariff items.