2019 (9) TMI 1428 - AT - Central Excise

Classification of goods - Industrial Solvents used in Paints/Rubber etc. - intermediate goods or not - allegation that intermediate products namely second cut distillate and residue which were blended to obtain the solvent SL-2 and SL-11 are liable to excise duty under chapter sub-heading 2710.13 as motor spirit - HELD THAT - The Commissioner sent the samples to the HPCL laboratory for necessary test to ascertain whether the product in question specify the criteria of motor spirit as BIS 2796-2000 and hence is not suitable for use as fuel in the spark ignition engine. Since the said report dated 18-11-2005 did not furnish as to whether the goods in question could be used as motor spirit in admixture with other substance the information was called for on the said issue. In its report dated 25-11-2005 it has been clarified that even with the additive the samples cannot be considered as motor spirit. Even though the department has furnished invoice of GAIL and classification list of M/s. Atlas Petrochemicals since they did not provide the necessary test results of the said product and established that as to why the impugned products of the respondent are comparable with the products of alleged other manufacturers the Learned Commissioner has observed that the products manufactured by the said manufacturer cannot be comparable as there is no specific evidence to indicate that the impugned products of the assessee are also marketable as motor spirit. Consequently the Commissioner has decided to issue in favour of the respondent. In absence of any contrary report indicating that the impugned product would be used as fuel in spark ignition engine the product cannot be classifiable under chapter sub-heading 2710.13 of Central Excise Tariff Act 1985 - there are no discrepancies in the impugned order passed by the Learned Commissioner - appeal dismissed - decided against Revenue.

Summary

Issues: Classification of industrial solvents for excise duty under Chapter sub-heading 2710.13 as 'motor spirit' and eligibility for exemption under Notification No. 67/95-C.E.

Analysis:
1. Classification of Industrial Solvents: The case involved the classification of industrial solvents produced through distillation under Chapter sub-heading 2710.13 as 'motor spirit.' The appellant argued that the products were not suitable for use as fuel in a spark ignition engine, as confirmed by testing at HPCL. The Revenue contended that the products were similar to those sold by other manufacturers under the same classification. The Tribunal observed that to be classified as 'motor spirit,' the product must meet criteria for flash point and suitability for use as fuel, not just flash point alone. The Commissioner relied on the HPCL test reports, which indicated that the products did not qualify as motor spirit even with additives, leading to the conclusion that the products were not classifiable under Chapter sub-heading 2710.13.

2. Eligibility for Exemption: The appellant also raised the issue of eligibility for exemption under Notification No. 67/95-C.E. The Commissioner found in favor of the respondent, stating that the products did not meet the criteria for classification as motor spirit, hence were not excluded from the scope of the exemption. The respondent cited previous cases where similar issues were settled in their favor, emphasizing that the intermediate products were not classifiable under tariff Heading 2710.13. They argued against invoking the larger period of limitations due to the classification of the product not being under tariff Heading 2710.13 as motor spirit, indicating no suppression or mis-declaration on their part.

3. Judicial Precedents: The respondent referred to previous cases such as Ram Remedies Pvt. Ltd. v. Commissioner of Central Excise, Shriram Petroleum Industries v. Commissioner of Central Excise, and Jagdamba Petroleum P. Ltd. v. Commissioner of Central Excise to support their argument regarding the classification of the intermediate products and the eligibility for exemption under Notification No. 67/95-C.E.

In conclusion, the Tribunal upheld the Commissioner's decision, dismissing the appeals filed by the Revenue as lacking merit. The judgment highlighted the importance of meeting specific criteria for classification as 'motor spirit' under Chapter sub-heading 2710.13 and emphasized the significance of testing and evidence in determining the classification of industrial solvents for excise duty purposes.