2015 (1) TMI 172 - AT - Central Excise

Classification of goods - Product to be classified as motor spirit or not - the flash point of the product is below 250C - condition of use of fuel in power ignition engine - Held that - directions of the Tribunal have not been carried out in view of the fact that the second requirement of suitability for use spark ignition engine has not at all been examined. The opinion of CTSM of IOCL Vadodara is also not conclusive since he himself has clarified that from the given distillation range of solvents, it appears that these solvents can be blended with other petroleum streams to meet the specifications for motor spirit. This cannot be considered as conclusive opinion. Further, Tribunal in case of M/s. Indu Nissan Oxo Chemical Industries Ltd. v. CCE, Vadodara as reported in 1998 (3) TMI 220 - CEGAT, MUMBAI , had held relying on U.S. Customs case that the term suitable for use means actually, practically and commercially fit for such use and not casually incidental or possible use. In view of the above, Commissioner s reliance upon the opinion of CTSM cannot be held appropriate. In the absence of specific test report in support of the product and in view of the fact that the admittedly even at the time of visit of the officers, samples were not available facilitating the test for suitability of product for use in spark ignition engine, the Commissioner s order cannot be sustained. - Following decision of AVANI PETROCHEM LTD. Versus COMMISSIONER OF C. EX., VADODARA-II 2009 (8) TMI 442 - CESTAT, AHMEDABAD - Decided in favour of assessee.

Summary

Issues involved: Classification of the product manufactured by the appellant-asseesee, imposition of penalties, suitability of the product for use as fuel in power ignition engine.

Classification Issue: The main issue in the appeals is the classification of the product manufactured by the appellant-asseesee. The Revenue argues that the product falls under the category of motor spirit due to its flash point being below 25^0C. However, the appellant contends that the product does not meet the condition of being suitable for use as fuel in a power ignition engine. The Tribunal had earlier remanded the matter back to the adjudicating authority for further consideration, emphasizing the need to test the product's suitability for use as fuel. The appellant relied on previous judgments to support their position.

Penalties Imposition Issue: The appeals of other individuals are against the imposition of penalties. The Tribunal found that the adjudicating authority did not fulfill the requirement of examining the product's suitability for use in a spark ignition engine. The Commissioner's reliance on an opinion was deemed inappropriate due to lack of specific test reports supporting the product's suitability. As samples were not available for testing at the time of the officers' visit, the Commissioner's order and the penalties imposed were set aside.

Judgment Analysis: The Tribunal found that the matter required fresh consideration, including providing details of comparable goods to the appellants and testing the product for its suitability for classification under the relevant sub-heading. The Tribunal emphasized that meeting the flash point criterion alone was not sufficient for classification. The Tribunal also highlighted the importance of the product being practically and commercially fit for use, not just potentially suitable. Ultimately, the Tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeals with consequential relief. The judgment was based on the precedent set by a previous case and the failure to conduct necessary tests and provide conclusive evidence regarding the product's suitability for use in a spark ignition engine.

Conclusion: The Tribunal's decision emphasized the importance of thorough examination and testing to determine the classification of a product, especially in cases involving complex criteria such as suitability for use in specific engines. The judgment provided clarity on the requirements for classification and highlighted the need for concrete evidence to support such determinations, ultimately leading to the setting aside of the impugned order and penalties imposed.