2014 (9) TMI 846 - AT - Central Excise

Classification of the product manufactured - Revenue is of the view that the product manufactured by the appellant is Motor Spirit on the ground that the flash point of the product is below 250C, while the appellant is of the view that the product cannot be classified as motor spirit on the ground that that the product manufactured by the appellant did not satisfy the condition of use as fuel in spark ignition engines - Held that - Directions of the Tribunal have not been carried out in view of the fact that the second requirement of suitability for use spark ignition engine has not at all been examined. The opinion of CTSM of IOCL Vadodara is also not conclusive since he himself has clarified that from the given distillation range of solvents, it appears that these solvents can be blended with other petroleum streams to meet the specifications for motor spirit. This cannot be considered as conclusive opinion. Further, Tribunal in case of M/s. Indu Nissan Oxo Chemical Industries Ltd. v. CCE, Vadodara as reported in 1998 (3) TMI 220 - CEGAT, MUMBAI , had held relying on U.S. Customs case that the term suitable for use means actually, practically and commercially fit for such use and not casually incidental or possible use. In view of the above, Commissioner s reliance upon the opinion of CTSM cannot be held appropriate. In the absence of specific test report in support of the product and in view of the fact that the admittedly even at the time of visit of the officers, samples were not available facilitating the test for suitability of product for use in spark ignition engine, the Commissioner s order cannot be sustained. - Decided in favour of assessee.

Summary

Issues Involved:
Classification of product manufactured by the appellant as Motor Spirit based on flash point and suitability for use as fuel in spark ignition engines.

Analysis:
The main issue in the appeal was the classification of the product manufactured by the appellant. The Revenue contended that the product was Motor Spirit due to its flash point being below 25^0C, while the appellant argued that the product did not meet the conditions for use as fuel in spark ignition engines. The Tribunal noted that this was the second round of litigation, with the matter previously remanded for reconsideration. The appellant cited previous judgments to support their position, emphasizing the need for the product to be suitable for use as fuel. The Tribunal observed that the adjudicating authority had not adequately considered the suitability for use in spark ignition engines as required. They highlighted the necessity for the product to meet specific criteria beyond flash point alone. The Tribunal also criticized the reliance on certain opinions without proper testing and evidence to support the classification.

The Tribunal ultimately concluded that the demand could not be sustained as the product's suitability for use in spark ignition engines had not been adequately examined. Consequently, the penalties imposed on the appellant were also set aside. The Tribunal referenced a previous judgment to emphasize the commercial and practical fitness required for the product's use, not just a theoretical possibility. Based on the established legal principles and the lack of conclusive evidence supporting the classification as Motor Spirit, the impugned order was deemed erroneous and set aside. The appeals were allowed, providing consequential relief to the appellants.

In summary, the judgment focused on the classification of the appellant's product as Motor Spirit, emphasizing the importance of suitability for use in spark ignition engines beyond flash point considerations. The Tribunal highlighted the necessity for proper testing and evidence to support such classification, ultimately setting aside the impugned order due to the lack of conclusive proof regarding the product's suitability for its claimed classification.