2019 (11) TMI 242 - AT - Central Excise

Classification of imported intermediate goods - Reformate - classified under CETH 27101113 or under CETH 27101119? - Revenues case is that the reformate imported by the appellants is nothing but Motor Spirit commonly known as Petrol; as per definition at supplementary notes to chapter 27 of Schedule to the CETA - HELD THAT - The Chemical Examiner Report is not comprehensive and therefore, it cannot be concluded on basis of the report that the impugned product i.e., reformate is motor spirit adhering to BIS 2796-1995 standards for EURO II, III, IV Standards. Therefore, it cannot be called motor spirit commonly known as petrol as is understood in common parlance - the report of BPCL who are experts in the field is to be relied upon in comparison to Chemical Examiner's report which is not comprehensive and conclusive. Appeal dismissed - decided against Revenue.

Summary

Issues: Classification of imported reformate, eligibility of input credit under Cenvat Credit Rules, 2004, and reliance on test reports.

Classification of imported reformate:
The case involved M/s BPCL importing reformate to produce Motor Spirit (Euro III MS). The Revenue argued that the reformate imported was essentially Motor Spirit or petrol, ineligible for input credit under Cenvat Credit Rules, 2004. The appellants contended that the reformate was different from petrol as it required blending to produce Euro-III and Euro-IV petrol. The Chemical Examiner's test report indicated the product's characteristics aligned with Motor Spirit standards. However, the appellants presented refinery test reports showing discrepancies from Motor Spirit specifications. The Tribunal noted that the Chemical Examiner's report lacked comprehensive testing as per IS: 2796-1995 standards and favored BPCL's expertise over the Chemical Examiner's report.

Eligibility of input credit under Cenvat Credit Rules, 2004:
The Revenue argued that the reformate did meet the criteria for Motor Spirit as per the CETA schedule, making it ineligible for input credit under Cenvat Credit Rules, 2004. The Commissioner had initially dropped the show cause notices, considering the reformate as an input under CCR, 2004. The Tribunal upheld the Commissioner's decision, emphasizing that the product did not align with Motor Spirit commonly known as petrol, as per BIS standards for EURO 3, and thus qualified as an input under CCR, 2004.

Reliance on test reports:
The case highlighted the importance of comprehensive testing in determining the classification of imported products. While the Chemical Examiner's report indicated similarities with Motor Spirit, the Tribunal favored BPCL's detailed refinery test reports, which showed discrepancies from Motor Spirit specifications. The Tribunal emphasized the need for thorough technical analysis, including various parameters beyond those tested by the Chemical Examiner, to accurately classify imported products.

In conclusion, the Tribunal rejected the Revenue's appeals, affirming the Commissioner's decision that the imported reformate was correctly classified as an input under CCR, 2004, and not as Motor Spirit commonly known as petrol. The judgment underscored the significance of detailed technical analysis and expertise in determining the classification of imported products under relevant regulations.