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2013 (9) TMI 538 - AT - Central ExciseClassification - manufacturing - motor spirit or Organic Composite Solvent - Chapter sub-heading No. 3814 00 10 or chapter sub-heading 2710 11 13 - Held that - The onus of proving that the product in question falls within the definition of motor spirit classifiable under aforesaid sub-heading is squarely on the Department - Chemical Examiner has given finding in respect of sample being composed of hydrocarbon oil and its flash point is below 25 C. The Chemical Examiner however declined to comment or certify whether or not the sample by itself or in admixture with any other substance was suitable for as fuel in spark ignition engine on the plea that it was not possible by the laboratory to determine octane number and give finding regarding suitability to be used as fuel in spark ignition engine. Thus it is clear that the chemical analysis report does not establish that the disputed goods fulfil the requirement of definition of motor spirit in the Chapter Heading 27 - Following decision of Jagdamba Petroleum (P) Ltd. v. C.C.E. 2003 (10) TMI 123 - CESTAT, NEW DELHI - Decided in favour of assessee.
Issues Involved:
Classification of disputed goods as "Organic Composite Solvent" or "Motor Spirit" under Central Excise Tariff Act, 1985. Detailed Analysis: Issue 1: Classification of Disputed Goods The appellants claimed the goods as "Organic Composite Solvent" under sub-heading 3814 00 10, while the Department argued they should be classified as "Motor Spirit" under sub-heading 2710 11 13, resulting in a demand for higher excise duty. Show cause notices were issued, and subsequent orders confirmed the demand, interest, and penalties. The main raw materials used for manufacturing the goods were Naphtha, Special Boiling Point Spirit, and Pentane, obtained through fractional distillation. The key dispute was the classification of the goods based on their composition and use. Issue 2: Arguments of the Appellants The appellants contended that the goods met the criteria of "Organic Composite Solvent" as per the Chemical Examiner's report and the definition of "motor spirit" in the Central Excise Tariff Act. The Chemical Examiner confirmed the composition and flash point of the goods but couldn't verify their suitability as fuel for spark ignition engines due to laboratory limitations. The appellants argued that the orders were passed without proper technical basis and violated precedents set by previous Tribunal judgments. Issue 3: Arguments of the Department The Department maintained that the goods should be classified as "Motor Spirit" since the main component, Naphtha, could be used as fuel in spark ignition engines. They argued that the final product obtained through fractional distillation was essentially pure Naphtha suitable for such use. The Department supported the classification and imposition of higher excise duty based on the nature and intended use of the goods. Issue 4: Tribunal's Analysis and Decision The Tribunal reviewed the Chemical Examiner's report, which confirmed the composition and flash point of the goods but couldn't verify their suitability as fuel for spark ignition engines. The Tribunal noted that the adjudicating authority classified the goods without proper scientific verification of their suitability for the specified use. Referring to a similar case precedent, the Tribunal emphasized the importance of the Chemical Examiner's opinion in determining classification. As the Department failed to prove the goods met the criteria for "Motor Spirit," the Tribunal set aside the impugned orders and allowed the appeals, concluding that the differential duty demand lacked sufficient support. In conclusion, the Tribunal's decision highlighted the significance of scientific verification and adherence to statutory criteria in classifying excisable goods under the Central Excise Tariff Act, ultimately leading to the setting aside of the demand for higher excise duty.
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