2010 (3) TMI 562 - AT - Central Excise

Solvent - Classification of - the main dispute relates to classification of industrial solvents, which are sought to be classified under SH2710.13 as Special Boiling Point Spirits by the department and under SH 27 10.90 (residuary sub-heading) by the assessees for the relevant periods. Held - suitability of a product for use as fuel in spark ignition engines is to be determined practically. No evidence on record that Naphtha distillates or solvent cleared for use as fuel in spark ignition engines. Assessee cleared impugned products to paints, rubber, plastic and pharmaceutical industries. No iota of evidence that naphtha distillates cleared for motor vehicles. Findings of commissioner based on technical literature cannot be a substitute for evidence required to classify goods under sub-heading 2710.13. impugned item classifiable under sub-heading 2710.90 and benefit of notification available to naphtha distillates.

Summary

Issues:
Classification of industrial solvents and naphtha distillates under SH2710.13 or SH2710.90 for duty purposes. Denial of benefit of Notification No. 67/95-C.E. to the assessee.

Analysis:
The main dispute in this case revolves around the classification of industrial solvents and naphtha distillates for duty purposes. The department sought to classify industrial solvents under SH2710.13 as 'Special Boiling Point Spirits', while the assessees argued for classification under SH2710.90 (residuary sub-heading) for the relevant periods. The period of dispute varied for different companies. The Commissioner classified the industrial solvents under SH2710.13 and denied the benefit of Notification No. 67/95-C.E. to the assessee. The appeals raised a classification dispute regarding both final products (industrial solvents) and intermediate products (naphtha distillates).

The assessees contended that both the final products and intermediate products should be classified under SH2710.90 and not under SH2710.13 as claimed by the Revenue. They argued that the products did not meet the conditions required for classification under SH2710.13 as 'Motor Spirit'. The assessees supplied solvents to industries like paints, rubbers, plastics, and pharmaceuticals, not for use as fuel in spark ignition engines. The Tribunal's previous decisions emphasized the practical determination of a product's suitability for use as fuel in spark ignition engines. The Revenue's classification was deemed inaccurate, leading to the products falling under SH2710.90 as claimed by the assessees.

The Commissioner's findings, relying on literature and Distribution Order, were challenged as they did not align with the Tribunal's consistent view. The Commissioner's assertion that naphtha distillates were suitable as fuel for spark ignition engines based on literature was deemed insufficient. The Tribunal emphasized the practical evidence of actual use as fuel in spark ignition engines, which was lacking in this case. Consequently, the goods were classified under SH2710.90, granting the benefit of Notification No. 67/95-C.E. to naphtha distillates. The appeals by the parties were allowed, and the Revenue's appeal was dismissed, affirming the Commissioner of Central Excise, Goa's classification decision.

In conclusion, the Tribunal upheld the classification of the goods under SH2710.90 as claimed by the assessees, rejecting the Revenue's classification under SH2710.13. The practical evidence of use as fuel in spark ignition engines was deemed necessary for accurate classification, leading to the benefit of Notification No. 67/95-C.E. being granted to the assessees.