2017 (3) TMI 14 - AT - Central Excise

Classification on residual oil - classified under CETH 27109900 or under CETH 27101990? - Held that - during the course of adjudication the appellant has produced the certificate issued by the Chartered Engineers and the same has not been considered by the adjudicating authority in true spirit - Further, the appellant has raised certain issues such as scope of SCN, whether the residual oil is manufactured by the appellant or not, whether the residual oil is to be classified as waste oil under CETH 27009900 or 27101990 and the issue of time bar which were not examined by the adjudicating authority, therefore, the matter needs examination at the end of the adjudicating authority - appeal allowed by way of remand.

Issues:
Classification of residual oil under CETH 27109900 as waste oil or under CETH 27101990 as others; Allegation of duty evasion; Admissibility of certificate issued by Chartered Engineer; Scope of show cause notice; Whether residual oil was manufactured by the appellant; Issue of time bar.

Classification of Residual Oil:
The appellants appealed against an order demanding duty by changing the classification of residual oil. The appellants argued that the residual oil should be classified as waste oil under CETH 27109900 based on a certificate from a Chartered Engineer. They contended that the residual oil did not meet the characteristics of fuel oil or diesel oil. The appellants claimed that the adjudicating authority did not consider the certificate and that the Revenue had not proven that the residual oil should not be classified as waste oil. The appellate tribunal found that the certificate was not considered by the adjudicating authority and that the impugned order had no merits. The tribunal remanded the matter back to the adjudicating authority for re-examination.

Allegation of Duty Evasion:
The Central Excise Officers issued a show cause notice alleging that the residual oil was misclassified and duty evasion occurred. The appellants argued that the adjudicating authority went beyond the allegations in the show cause notice. They cited a Madras High Court decision to support their claim that the adjudication order was not sustainable. The appellants contended that no duty was payable as the residual oil was a byproduct of the distillation process. They referenced previous cases to support their argument. The tribunal noted that certain issues, including the scope of the show cause notice and whether the residual oil was manufactured by the appellant, were not examined by the adjudicating authority. The tribunal remanded the matter for further examination.

Admissibility of Certificate by Chartered Engineer:
The appellants submitted a certificate by a Chartered Engineer to support their classification of residual oil as waste oil. They argued that the certificate showed the residual oil did not meet the criteria of fuel oil or diesel oil. The tribunal found that the certificate was not considered by the adjudicating authority, leading to the decision to remand the case for re-examination.

Scope of Show Cause Notice:
The appellants contended that the adjudicating authority exceeded the scope of the show cause notice by relying on additional sources beyond the initial allegations. They referenced a Board Circular and argued that the adjudication order was not sustainable based on the show cause notice. The tribunal acknowledged that certain issues raised by the appellants were not examined by the adjudicating authority and remanded the case for further consideration.

Manufacture of Residual Oil:
The appellants argued that the residual oil was not manufactured but generated as a byproduct of the distillation process. They referenced previous cases to support their claim. The tribunal noted that this issue, along with others, was not examined by the adjudicating authority and remanded the case for re-adjudication.

Issue of Time Bar:
The appellants claimed that part of the demand was time-barred. They argued that the adjudicating authority did not consider the certificate issued by the Chartered Engineer and that the Revenue failed to prove the reclassification of the residual oil. The tribunal found that the issue of time bar, along with other issues, was not examined by the adjudicating authority and remanded the case for re-examination.

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