2009 (2) TMI 205 - AT - Central Excise

Demand Extended period of limitation Revenue came to the conclusion that the product Iso-heptane cleared by the appellant satisfies the conditions for classification of the same under chapter 2710.00. The Revenue also relied upon the statement of customer, Reliance Petroleum to show that the product was being used by them to mix with motor spirit, popularly known as petrol for used as fuel in spark ignition engine - appellants submitted that the classification proposed is not correct and product manufactured is nothing but a chemical held that - on the chemical parameters as well as end use parameters the product satisfies the conditions required for classification under Chapter 2710 and therefore classification arrived at by Revenue is upheld - we cannot agree that it was a mis-declaration or suppression of facts to attract extended period under Section 11A for demanding differential duty. In this case demand relates to period from June 2000 to Nov 2000 and show cause notice was issued on 6-8-2002. Hence show cause notice is time barred.

Issues involved:
Classification of Iso Heptane under Central Excise Tariff Act, 1985 - Chapter Heading 2710.19 vs. 2901.10, Extended period invocation for demanding differential duty, Allegation of mis-declaration and suppression of facts, End-use and laboratory reports for classification, Time-barred show cause notice.

Analysis:

1. Classification of Iso Heptane:
The issue in this case revolved around the correct classification of Iso Heptane under the Central Excise Tariff Act, 1985. The appellants classified it under CETH SH 2901.10, while the Revenue contended that it should have been classified under 2710.19, which covers Motor Spirits. The Revenue's basis for this contention was the properties of Iso Heptane as per a statement by a customer, Reliance Petroleum Ltd., and the mandatory conditions for products like Petroleum Oils to be classified under Chapter sub-heading 2710. The Revenue argued that Iso Heptane satisfied the conditions for classification under chapter 2710.00 and was being used as a fuel in spark ignition engines. The show cause notice demanded a differential duty for the period from Jun 2002 to Nov 2002.

2. Allegation of Mis-declaration and Suppression of Facts:
The appellants argued that the proposed classification was incorrect as the product manufactured was a chemical, not a motor spirit. They contended that the Revenue's focus on flash point and end-use was irrelevant. The appellants maintained that they had regularly submitted RT-12 returns with the product description as Iso Heptane, and there was no suppression of facts. The Revenue, on the other hand, argued that suppression was rightly invoked as the flash point and end-use were not disclosed by the appellants.

3. End-Use and Laboratory Reports for Classification:
The Tribunal considered the chapter notes indicating that Motor Spirits have specific characteristics, including a flash point below 25^0C, suitable for use as fuel in spark ignition engines. The laboratory reports from Reliance Petroleum confirmed the end-use of Iso Heptane for mixing with petrol as fuel. The Tribunal upheld the classification by the Revenue based on the chemical parameters and end-use parameters, concluding that the product satisfied the conditions for classification under Chapter 2710.

4. Extended Period Invocation and Time-barred Show Cause Notice:
The Tribunal addressed the invocation of the extended period for demanding differential duty. It was noted that the manufacturing process was correctly described by the appellants, and there was no mis-description of the product. The Tribunal found that the show cause notice issued on 6-8-2002 for the period from June 2000 to Nov 2000 was time-barred. As a result, the impugned order was set aside, and the appeals were allowed with consequential relief to the appellants.

5. Separate Judgment:
Member (J) concurred with the decision to allow the appeal based on the point of limitation. However, she clarified that the merits of the case regarding classification were not considered and would be dealt with in the future at an appropriate occasion.

This detailed analysis highlights the key legal arguments, evidence, and conclusions drawn by the Tribunal in the judgment regarding the classification of Iso Heptane and related issues.

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