2014 (2) TMI 1050 - AT - Central Excise

Classification of goods - Reclassification of the products such as GOC and C-Pentane - Revenue relying upon the test report showing that boiling range of motor spirit and the product in question qualifies the same to be classifiable as motor spirit - Held that - as per Chapter Note 4(a) of Chapter 27 of the Central Excise Tariff, motor spirit means any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25 C and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines. In the present case, there is no evidence on record produced by the Revenue either before the adjudicating authority or in the present appeal that the product in question is suitable for use as fuel in spark ignition engines. In the absence of such evidence, we find no infirmity in the impugned order - Decided against Revenue.

Summary

Issues:
- Appeal against dropping of proceedings initiated by Show Cause Notice for reclassification of products under Central Excise Tariff.
- Classification of products such as GOC and C-Pentane as motor spirit under Chapter 27 of Central Excise Tariff.
- Interpretation of Chapter Note 4(a) of Chapter 27 regarding the definition of "motor spirit."
- Evidence requirement for classifying a product as motor spirit suitable for use in spark ignition engines.

Analysis:

The appeal before the Appellate Tribunal CESTAT MUMBAI was filed by the Revenue challenging the decision of the adjudicating authority to drop the proceedings initiated through a Show Cause Notice for the reclassification of products manufactured by the Respondents under the Central Excise Tariff. The Respondents were engaged in the production of Petroleum Products and Chemicals falling under various chapters of the Central Excise Tariff. The Revenue sought to reclassify products like GOC and C-Pentane as motor spirit under Chapter 27 of the Central Excise Tariff.

The adjudicating authority, after reviewing the evidence presented by the Respondents, ruled in favor of the Respondents. In the appeal, the Revenue relied on a test report indicating that the product in question met the boiling range of motor spirit, thus justifying its classification as such. However, the Respondents cited precedents, including the case of Jagdamba Petroleum Pvt. Ltd. and Shriram Petroleum Industries, to argue that without evidence demonstrating the product's suitability for use as fuel in spark ignition engines, it cannot be classified as motor spirit.

The Tribunal analyzed Chapter Note 4(a) of Chapter 27 of the Central Excise Tariff, which defines "motor spirit" as a hydrocarbon oil suitable for use as fuel in spark ignition engines with a flash point below 25^0C. The Tribunal noted the absence of evidence from the Revenue proving the product's suitability for such use. Consequently, the Tribunal found no fault in the decision of the adjudicating authority to drop the proceedings, leading to the dismissal of the Revenue's appeal.

Furthermore, the Cross Objections filed by the assessee were also addressed and disposed of in similar terms as the main appeal. The judgment emphasized the importance of providing substantial evidence to support the classification of a product as motor spirit under the Central Excise Tariff, especially regarding its suitability for use in spark ignition engines.