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2018 (4) TMI 829 - AT - Central ExciseClassification of goods - Low Aromatic Naphtha (LAN) - whether classifiable under heading 2710.14 is actually classifiable as Other Special Boiling Point Spirit or is it classifiable as Naptha under heading 2710.19 prior to 1.3.2005 and as Naptha under 2710 11 90 after 1.3.2005? - Held that - the test results prove that the products answers to the definition of Special Boiling Point Spirits in all respects except the description that appears in the single dash entry in the heading. The onus is on revenue to establish that the goods answer to the description given in single dash entry (upto 1.3.05) and to the definition of motor spirit after (1.3.05). Since revenue has not even attempted to test the goods for this purpose it has failed to establish its claim to classification under that entry. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Classification of Low Aromatic Naphtha (LAN) under the Central Excise Tariff Act (CETA), 1985. 2. Whether LAN qualifies as "Special Boiling Point Spirit" or "Naphtha." 3. The applicability of the definition of "Motor Spirit" for classification purposes. 4. The burden of proof on the Revenue to establish the correct classification. Detailed Analysis: 1. Classification of Low Aromatic Naphtha (LAN): The primary issue in this case is the classification of LAN manufactured by the respondent. The respondent classified LAN under subheading 2710.14 as 'Naphtha,' while the Revenue sought to classify it under subheading 2710.13 as "Other Special Boiling Point Spirit." 2. Whether LAN Qualifies as "Special Boiling Point Spirit" or "Naphtha": The Revenue argued that LAN should be classified as "Other Special Boiling Point Spirit" under subheading 2710.13, which does not specify a boiling point range. They contended that LAN meets the criteria for Special Boiling Point (SBP) spirits, which are hydrocarbon oils with a boiling point range from 35°C to 165°C and must pass a volumetric distillation test. The Revenue presented test results of the four streams that go into the LAN pool and the LAN sample itself, showing that the difference between the temperatures at which 5% and 90% by volume distill is less than the statutory limit of 60°C. This indicated that LAN qualifies as SBP spirits. Additionally, the Revenue argued that LAN does not contain any anti-knock preparations and meets the criteria for light oils, as 90% or more by volume distills at 210°C. 3. The Applicability of the Definition of "Motor Spirit": The definition of "Motor Spirit" under Chapter heading 27.10 is any hydrocarbon oil with a flash point below 25°C, suitable for use as fuel in spark ignition engines. The Revenue did not conduct tests to establish that LAN meets this definition, assuming that the respondent's original classification under 2710.14 as "Naphtha" was under the same single dash entry qualifying as "Motor Spirit." 4. The Burden of Proof on the Revenue: The Tribunal emphasized that the burden of proof lies with the Revenue to establish that LAN meets the description of "Motor Spirit" for classification under 2710.13 (prior to 1.3.2005) or under headings 2710 11 12 to 2710 11 19 (after 1.3.2005). Since the Revenue did not attempt to test the goods for this purpose, it failed to establish its claim for classification under the contested entry. Conclusion: The Tribunal found that the Revenue did not provide sufficient evidence to classify LAN as "Other Special Boiling Point Spirit" under subheading 2710.13 or the relevant headings after 1.3.2005. The appeal by the Revenue was dismissed, and the classification of LAN as 'Naphtha' under subheading 2710.14 was upheld. Pronouncement: The judgment was pronounced in court on 23.03.2018.
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