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TMI Blog1991 (1) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... and an agitator and heated up to 50° to 60°C to provide better blending and to remove traces of moisture and then cleared in bulk in lorry tanks and in drums. All these process oils being exclusively used by the tyre industry (for strengthening and flexibility of tyres), the Dept. was of the view that the oils did not merit classification under Chapter Heading 2710.50 of the CET. Based upon a report of the Chemical Examiner (in some other context) that process oil is ruled out of Heading 2710.50 due to the predominance of aromatic constituents over non-aromatic constituents, a show cause notice was issued to the appellants on 4-7-1988 for claiming differential duty for the quantity cleared during the period 1-12-1987 to 31-5-1988. The show cause notice stated that since process oils are solely intended for processing in tyre industry and not ordinarily used as furnace oil i.e. to say any 'hydrocarbon oil which is ordinarily used as furnace fuel and not suitable for use in Spark Ignition Engines and which satisfies the following requirements. (i) has a smoke point of less than 10 mm (ii) leaves certain residue of not less than 1/4% by weight when tested by Ramsbottom carb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, learned DR. 5. Taking up the two appeals relating to demand of duty, we find that in the show cause notice dated 4-7-1988, there is no allegation of suppression. However, since the demand is for a period beyond 6 months (1-12-1987 to 31-5-1988), the Assistant Collector could not have issued the show cause notice because Section 11A was amended on 27-12-1985 providing for issue of show cause notice by the Collector of Central Excise while invoking the extended period of limitation of 5 years. The corrigendum dated 26-7-1988 also becomes barred by limitation and is without jurisdiction. In E/A/4152/89-C, the show cause notice of 10-12-1987 alleges suppression and duty has been demanded for the period from 1-6-1987 to 30-11-1987. Part of period is beyond 6 months. On both counts, the Assistant Collector could not have issued the notice for want of jurisdiction. The corrigendum also falls for the same reasons. 6. The argument of the learned DR that show cause notice is valid as it has been issued under Rule 9 wherein the provisions of Section 11A is imported only for the purpose of time-limit and not for the purpose of jurisdiction, is no longer sustainable in view of order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances mentioned therein. But it has been held by the Hon'ble Supreme Court that demand cannot be enforced without issue of show cause notice and due opportunity of representation. So show cause notice has to be issued before enforcing demand which can be raised under provisions of Rule 9(2). In that case it has to be followed with proper adjudication procedure. When the occasion of adjudication arises obviously provisions of Section 11A will come into play. So the authority named therein would be entitled to exercise powers in the given set of circumstances stated therein. So when the question of invoking larger period of limitation arises or situation is that the non payment or short payment etc. arises out of suppression, fraud etc., then, only the Collector can exercise powers and not the Assistant Collector even under Rule 9(2). So in our view not only the aspect of period of limitation provided in Section 11A should be read to have been incorporated in Rule 9(2) vide MF(DR) Notification No. 19/CE dated 14-1-1981, (though by reading it, it appears to be so) but the whole concept of level of authority as demarcated in Section 11A should also be understood to have been imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assified under this heading, the product should be shown to be residues of petroleum oils or of oil obtained from bituminous minerals. Residue is defined at page 115 of the "Glossary of Terms used in Petroleum Industry" published by the Statistics Division of Petroleum Information Service, New Delhi, as :- "Heavy oil or residuum left in the still after gasoline and other distillates have been distilled off, or residues from crude oil after distilling off all but the heaviest component." It has to be shown that the products in question fulfil these characteristics. The appellants have contended that when they are mixing two products obtained from the refinery, namely IN extracts and HN extracts, the question of calling the resultant mixed product as a 'residue' would not arise. In this context, the appellants relied on the meaning of the term 'residue' as set out in the "Glossary of Terms used in Petroleum Industry" in India referred to earlier. In this context, our attention was also drawn to the explanatory notes under Heading 27.13 of the "Harmonized Commodity Description and Coding System" wherein at page 222 of Volume 1, it is stated :- "(C) Other residues of petroleum oils ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the matter to the Assistant Collector for de novo adjudication on classification after affording an opportunity of personal hearing to the appellants. We make it clear that in the event of classification being upheld under Heading 2710.50, there can be no question of charging duty on the disputed products. The direction of the lower appellate authority to re-determine duty due under Heading 2707.90 and issue demand in case of short-levy cannot be sustained in view of our order in the case of Collector of Central Excise, Bombay v. Bright Brothers (Order No. 1093/90-C dated 4-10-1990) wherein we have held that duty paid under a particular tariff heading cannot be adjusted towards duty payable under a different tariff heading for which proper assessment proceedings sanctioned by law had not been initiated by the Department. This finding has been arrived at, upon consideration of the Delhi High Court's judgment in Bharat Commerce & Industries Ltd. v. Union of India [1979 (4) E.L.T. (J527)], the Punjab High Court's judgment in Hazarimal Kuthiala v. I.T.O. Special Circle, Ambala Cantt. (AIR 1957 Punjab) and the Tribunal's Order in Indian Plywood Mfg. Co. Ltd. v. Collector of Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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