2015 (7) TMI 461 - AT - Central Excise

Classification of LABFS and LARO manufactured by IOCL - Whether the same is classifiable under CETH 2710.29 as claimed by the appellants or the same should be classified elsewhere as not Kerosene - whether the benefit of Notification No. 75/84-CE will be admissible to the products LABFS and LARO manufactured by the appellant - Held that - even if is not known as Kerosene will be classified under 271029. From the description of Kerosene given in tariff heading 2710, product like mineral colza and turpentine substitute are not held to be classifiable under 271029 as they are classified under 271091 and 271092 etc. The description given in CETH 2710 is interpreted by the judicial pronouncements that mineral oils meeting with the parameters specified, will be classified under 2710.29 even if they are not known as Kerosene in common parlance. In view of above it is held that products LABFS and LARO will be classifiable under 2710.29 as claimed by the appellant. It is practice that in case of any doubt or ambiguity, taxing provision is normally construed in favour of the assessee but when it is case of granting some exemption then there should be strict interpretation and in case of any doubt or ambiguity the benefit must go to the State. The word Kerosene used in the exemption Notification 75/84-CE therefore, cannot be understood by taking recourse to parameters given to Kerosene , under CETH 2710. The word Kerosene has to be understood with respect to interpretation/ understanding attributed by those who deal in Kerosene . This is the ratio laid by the Hon ble Supreme Court in the case of IOCL vs. CCE, Vadodara 2010 (10) TMI 7 - SUPREME COURT OF INDIA , and is relevant Product LABFS and LARO are not cleared as Kerosene at all and only used for the purpose other than for illuminant oil for burning lamps or other domestic use. The ratio of the law laid down by the Hon ble Supreme Court in the case of IOCL vs. CCE, Vadodara (supra), word Kerosene used in exemption notification No. 75/84-CE will have to be understood only with that category of Kerosene which is distributed through PDS as Kerosene . For the purpose of classification of mineral oils other than Kerosene cleared through PDS, these products will also be classified under CETH 2710.29, as held by various judicial pronouncements, but for the purpose of benefit under exemption notification 75/84-CE only those categories of Kerosene will be eligible which are distributed though PDS. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Classification of Linear Alkyl Benzene Feed Stock (LABFS) and Low Aluminum Rolling Oil (LARO).
2. Eligibility for exemption under Notification No. 75/84-CE.

Issue-wise Detailed Analysis:

1. Classification of LABFS and LARO:
The appellant argued that LABFS and LARO should be classified under CETH 2710.29, as both products possess the characteristics specified under this heading. The appellant cited previous judgments, such as CCE vs. IOCL [2003 (157) ELT 41 (Tri.)] and CCE, Bombay vs. Reliance Industries Limited [2000 (119) ELT 26 (Tri. LB)], which support the classification of similar products under CETH 2710.29 when they meet the specified parameters. The Tribunal agreed with the appellant, stating, "the issue is no more res-integra in view of the case law of CCE vs. IPCL [1990 (46) ELT 173 (Tri.)]," and held that "products LABFS and LARO will be classifiable under 2710.29 as claimed by the appellant."

2. Eligibility for Exemption under Notification No. 75/84-CE:
The appellant contended that the term "Kerosene" in the exemption notification should encompass all mineral oils classified under CETH 2710.29 if they meet the specified parameters. However, the Revenue argued that only Kerosene distributed through the Public Distribution System (PDS) qualifies for the exemption, citing the Supreme Court's judgment in IOCL vs. CCE, Vadodara [2010 (259) ELT 172 (SC)], which emphasized strict interpretation of exemption notifications.

The Tribunal concurred with the Revenue's position, highlighting that "an exemption notification is to be read with words used in the notification" and "the word Kerosene has to be understood with respect to interpretation/understanding attributed by those who deal in Kerosene." The Tribunal concluded that "for the purpose of benefit under exemption notification 75/84-CE only those categories of Kerosene will be eligible which are distributed through PDS."

Conclusion:
The Tribunal ruled in favor of the appellant regarding the classification of LABFS and LARO under CETH 2710.29. However, it denied the benefit of exemption under Notification No. 75/84-CE, affirming that only Kerosene distributed through PDS qualifies for the exemption. The appeals were thus rejected concerning the exemption but allowed concerning the classification.