2013 (11) TMI 1097 - AT - Central Excise

Classification of Condensate Waiver of Pre-deposit - Whether the goods classify under Sub-Heading 27101113, attracting Excise Duty as against the applicant claiming classification under Sub-heading 27090000 Tariff rate under sub-heading 27090000 is nil Held that - Condensate is a petroleum in natural state and is crude oil - the crude oil is excluded from the product i.e. Motor Spirit classifiable under Chapter sub-heading 2710, the product Condensate prima facie appear classifiable as crude oil under Chapter heading 2709 - The advice tendered by the Ministry of Petroleum based on the opinion of the trade understanding, Board is of the view that Condensate is classifiable as crude mineral oil under item 68 CET there is no change in the products specification and their product - Prima facie the Applicant could able to make a case for full waiver of the amount stay granted.

Summary

Issues:
Classification of Condensate under Sub-Heading 27101113 for Excise Duty vs. Applicant's claim under Sub-heading 27090000.

Analysis:
The case involved an application for waiver of pre-deposit of demand, interest, and penalty. The applicant, engaged in LPG recovery from natural gas, faced Show Cause Notices alleging misclassification of Gas Condensate. The Ld. Commissioner confirmed the demand, stating Gas Condensate as a mineral hydrocarbon classifiable under Sub-heading 27101113, contrary to the applicant's claim under Sub-heading 27090000. The Ld. Advocate cited a Tribunal order in a similar case, emphasizing the criteria for classification as motor spirits and lack of evidence on suitability for spark ignition. The Revenue argued based on flash point and classification by another assessee. The Tribunal analyzed the dispute, considering the Supplementary Note to Chapter 27, which clarified Motor Spirit criteria and excluded crude oil from the product. It noted the absence of evidence on the product's suitability as fuel for spark ignition engines.

The Tribunal referred to a Ministry's advice and Board's opinion on Condensate as a petroleum in natural state and crude oil, classifiable under sub-heading 2709.00. It highlighted the consistency in product specifications between the Tribunal's case and the current application, acknowledged by both parties. Consequently, the Tribunal found the Applicant's case for full waiver of the amount adjudged prima facie valid, waiving the pre-deposit requirement and staying recovery pending appeal disposal. The decision was pronounced in the open court, granting the stay petition.

This detailed analysis of the judgment highlights the classification dispute over Condensate, the legal interpretations, evidentiary considerations, and the Tribunal's decision on the waiver application, ensuring a comprehensive understanding of the legal issues involved.