2017 (4) TMI 1206 - AT - Central Excise

Classification of goods - Organic Composite Solvents - classified under CTH 3814.00 or CTH 2710.13 - case of appellant is that the Commissioner has clearly gone beyond the SCN in discussing the characteristics of raw material i.e. Naphtha and in holding that was a Motor spirit - whether the product manufactured by the appellants namely Organic Composite Solvents is classifiable under chapter sub heading 2710.13? - Held that - the onus of proving that the product in question falls within the definition of Motor Spirit classifiable under aforesaid sub heading is on the Revenue. In this case, the product in question has admittedly not been got tested by the department. The entire case of the department is therefore based on the test result recorded in the laboratory testing register of the appellants - in the absence of a proper test report done by the department, the reliance placed on the other evidence does not lead to the conclusion that impugned goods are Motor Spirit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of product under chapter sub heading 2710.13 - Whether product is classifiable as Motor Spirit.

Analysis:
The appellants appealed against an Order-in-Original passed by the Commissioner of Central Excise, Rohtak. The case involved the classification of the product manufactured by the appellants, Organic Composite Solvents, under chapter sub heading 2710.13. The department alleged that the product should be classified under Chapter Heading 2710.13 attracting Central Excise duty, instead of Chapter 3814.00 as claimed by the party. The Commissioner confirmed the demand, imposed penalties, and interest. The appellants contested this decision before the Tribunal.

The main issue to be decided was whether the product manufactured by the appellants falls under the definition of Motor Spirit classifiable under chapter sub heading 2710.13. The onus of proving this classification rested on the Revenue. The department did not conduct independent testing of the product but relied on the test results recorded in the laboratory testing register of the appellants. The Commissioner concluded that the product met the criteria of Motor Spirit based on these results and ISI specifications. However, the absence of a proper test report by the department raised doubts about the classification.

The definition of Motor Spirit requires the flash point to be below 25 degrees Celsius, a criterion not addressed in the test reports relied upon by the department. Additionally, the suitability of the product for use in a Spark Ignition Engine was not adequately established through scientific verification. The statements of the lab chemist and a buyer of the product could not substitute the necessary laboratory testing. The Tribunal emphasized the importance of scientific verification and cited a previous case where the lack of proper testing rendered the classification unsustainable.

Ultimately, the Tribunal set aside the Commissioner's order, stating that the findings lacked a scientific basis due to the absence of proper testing by the department. The appeal filed by the appellants was allowed, highlighting the necessity of scientific verification in determining the classification of products for excise duty purposes.