2008 (5) TMI 579 - AT - Central Excise

Summary

Issues:
Classification of naphtha distillates under Chapter Heading No. 2710.13 for the period from September 2001 to March 2003.

Analysis:
The Commissioner confirmed the demand of duty, interest, and penalty on the manufacture of petroleumsolvents, specifically naphtha distillates, under Chapter Heading No. 2710.13. The issue revolved around whether the naphtha distillates could be classified under this heading, which covers special boiling point spirits classified as motor spirit. The Department needed to prove that the naphtha distillates were suitable for use as fuel in spark ignition engines, as per the tariff definition.

The Tribunal cited various case laws to emphasize that for classification under sub-headings 2710.11, 2710.12, 2710.13, and 2710.14, the Department must provide evidence that the product is suitable for use as fuel in spark ignition engines. Without such evidence, the product cannot be classified under these sub-headings. In the present case, the Department failed to establish that the naphtha distillates met the criteria for classification under Heading 2710.13.

The Commissioner acknowledged the lack of evidence that the naphtha distillates could be used as fuel in spark ignition engines. The reliance on a Government Order and a Stay Order from a previous case was deemed insufficient to prove the product's suitability for classification under Heading 2710. The Tribunal granted unconditional waiver of the pre-deposit of duty and penalty, citing a strong prima facie case for total waiver based on the Stay Order in a similar case.

In conclusion, the Tribunal ruled in favor of the appellant, finding that the Department failed to provide sufficient evidence to classify the naphtha distillates under Chapter Heading No. 2710.13. The Tribunal granted a waiver of the pre-deposit of duty and penalty pending the appeal's disposal, based on a strong prima facie case for total waiver established by the appellant.