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TMI Blog1988 (4) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... was also being subjected to test in the laboratory of appellants and the test reports were being furnished to the Department. On the basis of these test reports, Assistant Collector held that the product cleared by appellants as furnace oil would become solid at 30 C or 86 F and therefore, it could be classified as mineral oil, much less a furnace oil, and that it should be classified under T.I. 11A(4), as other products derived from refining of crude petroleum, not otherwise specified . A notice was issued on 6.10.1982, demanding differential duty under Section 11A of the Act on the basis of reclassification of furnace oil under T.I. 11A(4). Appellants resisted this demand. However, the lower Authority confirmed the demand, rejecting the various grounds canvassed by respondents. 2. The Collector (Appeals) after examining the scope of Tariff Item 10 held as under: I observe that Tariff Item 10 covers furnace oil, that is to say any mineral oil which - has a smoke point at less than ten millimeters; possesses a viscosity of one hundred seconds or more by Redwood I Viscometer at 37.8 degrees of centigrade thermometer; leaves carbon residue of not less than 1/4 per cent by weig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no warrant in invoking the longer period of 5 years and the order was held to be liable to be set aside on the ground of time bar. Collector of Central Excise, Guntur in his ground of appeal has inter alia asked as under : For a product to be classifiable under T. I. No. 10, it should be a mineral oil satisfying the specifications prescribed under T. I. No. 10. The term Mineral Oil is defined in Explanation I under T. I. No. 6 which is applicable to T. I. No. 10 also. According to the explanation it must be an oil consisting of a single liquid Hydrocarbons or a liquid mixture of Hydrocarbons (except for associated impurities) derived from petroleum, coal, shale, peat or any other bituminous substance and includes a similar oil produced by synthesis or otherwise. The product cleared during the relevant period was found to have higher pour points as per the respondents Laboratory Finished product inspection reports . The Central Excise Chemical Examiner s Laboratory Test Reports have revealed that the product was solid at 300C/860F by pour point test. Pour Point Test determines whether a particular product is a liquid or a solid at a particular temperature. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the test reports there was an additional endorsement of the pour point while this endorsement was not found in the copy of the test report furnished by them to the Central Excise authorities. It was pointed out to him by the Bench that the test report dated 23.4.1982 relied upon by him showed that the goods had been also tested for viscosity at 37.8 degree C and passed the test of viscosity parameter as mentioned in Tariff Item 10. He could not give any explanation in this regard. 5. The learned representative of the respondents pleaded that the whole basis for the department s case was that the product was solid at room temperature based on the pour point test. The implication being, that the flow is essential characteristic of oil. He clarified that the product manufactured by them was stored in special tanks in which it stayed in a liquid form and was also transported to the buyers premises in the liquid form and was also stored so in special tanks at the premises of the buyers and that there is no contradiction from the department on this point. He pleaded that there is no dispute that the product is accepted in the trade as a fuel oil and is sold so by them for use as a fue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Hon ble Supreme Court in the case of Tungabhadra Industries -11 S.T.C. 827 have clearly held that the physical state of the product is not determinative of the character of a product. He stated that there is no mention in the tariff as to at what temperature the product should be in a liquid form. In view of this he pleaded that the goods should not be assessed under the residuary item when the specific entry of Tariff Item 10 squarely covers the goods. He further pleaded that there was no suppression of any fact on their part and in fact there was no requirement on their part to file the test reports which they had been filing on their own volition and kept the department informed of the nature of the goods being cleared by them. The representative of respondents also pleaded that there were no legal liability on their part to pay the duty as the goods have been moved in Bond to the I.O.C. who are the ultimate consumer, it is they who are to discharge the liability to duty. 7. The learned JDR for the department in reply pleaded that in terms of Rule 173 G(V) it was for the respondents to render account of the goods moved in bond. He also pointed out that judgment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parameter of viscosity is satisfied how the product can be taken to be not falling under the preview of Tariff Item 10. We would like to mention here that in Tariff Item 10, the parameter of the viscosity has been fixed with reference to a fixed temperature that is 37.8 degree C. It does not mean for determining the viscosity of a particular product it first has to be brought to the temperature of 37.8 C and then its viscosity has to be determined. So far as the viscosity parameter is concerned it is determined at the temperature at which the liquid at the time of clearance flows or is taken in liquid form at test, and then by deduction with the help of a conversion table, the viscosity at 37.8 C is determined. Viscosity is a parameter of the flow of the liquid and this parameter has been fixed obviously for the purpose of confining the scope of the tariff item as has been done in the present case. We observe that according to the Chemical Examiner s report this parameter stands satisfied. The revenue has made a grievance of the fact that the pour point test was not declared to the department and the appellants determined the same and only recorded the pour point in their own co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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