2000 (1) TMI 250 - AT - Central Excise

Summary

Issues: Classification of High Flash Low Sulphur (HFLS) manufactured by M/s. Indian Oil Corporation under Central Excise Tariff Act.

In this judgment, the issue at hand is the classification of High Flash Low Sulphur (HFLS) manufactured by M/s. Indian Oil Corporation under the Central Excise Tariff Act. The main contention revolves around whether the product should be classified under sub-heading 2710.31 as claimed by the company and confirmed by the Collector (Appeals), or under sub-heading 2710.39 as argued by the Revenue.

The appellant argued that H.F.L.S. is distinct from High Speed Diesel Oil (HSD) due to its unique properties and uses. They claimed that the product is used by the Navy for specific purposes where regular high-speed diesel oil is not suitable. The appellant also highlighted differences in specifications between H.F.L.S. and HSD, such as flash points and I.S. Specifications, to support their classification under a different sub-heading.

On the other hand, the respondent contended that the product in question is essentially a variant of High Speed Diesel Oil (HSD) known as HSD-HFLS, distinguished by its low sulphur content and high flash point. They argued that the price variation between HFLS and HSD is primarily due to these specific characteristics. The respondent referred to I.S. Specifications to support their position, emphasizing the flash point and sulphur content requirements for different grades of diesel oil.

Upon considering the arguments presented by both sides, the tribunal examined the relevant heading and sub-headings under the Central Excise Tariff Act. The tribunal noted that the Revenue's main ground was that HFLS is sold differently from HSD and is a distinct product. However, the Collector (Appeals) found that H.F.L.S. is essentially a type of diesel oil specified for naval applications, indicating its classification as HSD with specific characteristics tailored for Navy requirements. The tribunal observed that despite variations in flash point and sulphur content, the product still falls under the category of "high speed diesel oil" based on I.S. Specifications.

Consequently, the tribunal upheld the decision of the Collector (Appeals) and rejected the appeals filed by the Revenue, concluding that the High Flash Low Sulphur (HFLS) manufactured by M/s. Indian Oil Corporation should be classified under sub-heading 2710.31 as High Speed Diesel Oil (HSD) rather than under sub-heading 2710.39 as argued by the Revenue.