1988 (4) TMI 268 - AT - Customs

Summary

Issues Involved:
1. Classification of furnace oil under the Central Excise Tariff.
2. Applicability of the pour point test for classification.
3. Adherence to the parameters set out in Tariff Item 10.
4. Alleged suppression of facts and applicability of the extended period for duty demand under Section 11A.

Detailed Analysis:

1. Classification of Furnace Oil under the Central Excise Tariff:
The primary issue was whether the product cleared by the respondents as furnace oil should be classified under Tariff Item 10 or reclassified under T.I. 11A(4) as "other products derived from refining of crude petroleum, not otherwise specified." The Assistant Collector had held that the product would become solid at 30^0C or 86^0F and thus could not be classified as furnace oil. However, the Collector (Appeals) disagreed, stating, "I do not find any justification to import a condition viz., what mineral oil should be liquid at natural temperature and that natural temperature in Indian condition is 30^0C or 86^0F." The Collector (Appeals) concluded that the product met all the parameters of Tariff Item 10, including smoke point, viscosity, carbon residue, and color, thus it should be classified as furnace oil.

2. Applicability of the Pour Point Test for Classification:
The department argued that the product did not satisfy the definition of mineral oil as it was solid at normal temperature based on the pour point test. The Collector (Appeals) and the tribunal found this irrelevant, citing the Indian Standard Specification for Fuel Oils, which states, "the pour point test is not satisfactory as a measure of pumpability." The tribunal observed that the pour point test only determines the lowest temperature at which the product flows on its own and is not a specified parameter in Tariff Item 10 or 6.

3. Adherence to the Parameters Set Out in Tariff Item 10:
The tribunal noted that the product satisfied all the parameters of Tariff Item 10, including viscosity, which was confirmed by the Chemical Examiner's report. The tribunal stated, "We observe that according to the Chemical Examiner's report this parameter stands satisfied." The tribunal also clarified that the viscosity parameter is determined at the temperature at which the liquid flows and then converted to the specified temperature of 37.8^0C using a conversion table.

4. Alleged Suppression of Facts and Applicability of the Extended Period for Duty Demand under Section 11A:
The Collector (Appeals) held that there was no suppression of facts by the respondents, as they had furnished all relevant test reports to the department. The tribunal agreed, stating, "No case has been made out that the appellants had suppressed any fact or made any mis-statement with intent to evade payment of duty." Consequently, the longer period of 5 years for demanding duty under Section 11A was not applicable.

Conclusion:
The tribunal upheld the order of the Collector (Appeals), concluding that the product should be classified under Tariff Item 10 as furnace oil. The tribunal dismissed the department's appeal, stating, "We, therefore, find that no infirmity in the order of Collector (Appeals) and uphold the same. The appeals of the revenue are therefore dismissed."