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TMI Blog2000 (7) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... s it was alleged that in order to avail the benefit of NIL or lower rate of duty they had declared their products as Pitch blending with Tar Oils like Creosote oil, Anthracene oil etc. and in respect of PCM and Road Tar they have declared it as 'Tars/reconstituted tars'. This misclassification has resulted in lesser duties as under :- S. No. Name of the Product Classification rate of duty claim Proposed 1. PCM 2706 Nil 2708.11 Rs. 100 PMT 2. Road Tar 2706 Nil 2708.11 Rs. 100 PMT 3. Pitch 2708.11 Rs. 100 PMT 2708.19 15% Adv It was further alleged that as the noticee had resorted to evade duty, through wilful mis-statement and suppression of facts, the extended period of Section 11A was applicable for demanding duty. 3. The Commissioner found - (a) As regards classification "I have gone through the case records, facts and evidence on record and have also carefully considered the submissions made by the noticee. 1. The facts of the case, in brief, are that, the noticee, a Public Sector Undertaking of Govt. of India, working under Record Based Control, had classified their products, 'Pitch' under Chapter sub-heading 2708.11 leviable to duty @ Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be treated as reconstituted tars. Pitch :- No process of blending is done by the noticee for manufacturing pitch. The tar oils contained in the pitch remain in the natural course of distillation & no tar oils are added/blended. Therefore, the said product pitch, PCM & Road Tar merit for classification under sub-heading No. 2708.19, 2708.11, 2708.11 respectively instead of 2708.11, 2706.00, 2706.00 respectively, as claimed by the noticee. In the background of facts mentioned above, I find that the issue to be decided relates to the correct classification of 'Pitch, PCM & Road Tar. 2. Before proceeding to decide the classification of the disputed goods, I find it expedient to ascertain the difference between Tar & 'Pitch'. The Tariff description of the products is as mentioned below :- Tar :- Tar distilled from coal from lignite or from peat; Chapter Hdg. No. 2706 Pitch :- Pitch & pitch coke obtained from coal tar or from other mineral tars; Chapter Hdg. No. 2708. 2.1 From the above description it may be observed that while tar is obtained from the distillation of coal, lignite or peat. Pitch is obtained from the distillation of Tar. Thus pitch & Tar are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r commercial/trade understanding or definition given in any other statute. 1990 (45) E.L.T. 490 (Tri). 6. Now, to determine the appropriate classification of the disputed goods, I find it necessary to reproduce the tariff entry of pitch which is as follows :- 2708 Pitch & pitch coke obtained from coal tar or from other mineral tar. Pitch :- 2708.11 Obtained by blending with creosote oil or other coal tar distillates Rs. 100/- PMT 2708.19 Others 15% adv. 2708.20 Pitch coke NIL The above tariff description of Chapter sub-heading Nos. 2708.11 & 2708.19 is very clear & specific. Pitch obtained by blending with creosote or other coal tar distillates are classifiable under Chapter sub-heading No. 2708.11 & all other pitch are classifiable under Chapter sub-heading No. 2708.19 as 'others'. 7. The noticee has claimed classification of 'Pitch' under Chapter sub-heading No. 2708.11 on the plea that they manufacture 'Pitch' by 'fluxing back' process, which is nothing but blending of pitch with tar oils. In their support they have relied upon ISI specification No. IS : 216-1961 for coal tar Pitch, which distinguishes residue pitch obtained by direct dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Pitch' as stated by Shri Kuljit Singh, in his statement recorded on 13-10-1990 & from the process as described in the defence reply submitted by the noticee, I find that during the fractional distillation of Tar in the second stage evaporator column duly heated upto 360° - 400°C, most of the tar oils are driven out & the residue product is pitch. During the course of distillation, some of the oil vapours transform into drops & drip back/trickle back to the thick pitch. 9.1. I find that the noticee has construed the dripping back/trickling back of oils during the course of natural distillation of tars, as fluxing back process. 10. As per New Websters English Dictionary, the meaning of fluxing & blending is as below :- Flux - The state of flowing; constant change or movement; a flow or discharge; to cause flow; to make fluid; to fuse by melting; to flow. Blend To mix or mingle; mix thoroughly or intimatley; combine so that the things mixed or the line of division cannot be distinguished; mix in as different sorts of a commodity in order to produce a particular kind or quality. Thus flux/flow is definitely different from dripping back/trickling back of tar oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the noticees, reminder letters were issued and finally when no reply was received, a letter was issued to Shri Tata Raman Murthy, Sr. Manager (Fin. & Taxation), by Regd. A.D., dated 16-6-1994 informing therein that if no reply is received by 8th July, 1994, it will be presumed that they have no comments to offer in respect of the said test report. 14.1 Since the noticee did not submit their comments/defence even after receipt of the said letter, I take their silence as acceptance that the tar oils which drip back into the pitch, remain in the natural course of distillation in the pitch. I, therefore, come to the conclusion that the noticee by misdeclaring their product, 'Pitch' as 'obtained by blending with creosote oil or other coal tar distillates'; have wilfully mis-stated the description of their product which resulted in misclassification under Tariff sub-heading No. 2708.11 wherein the rate of duty is Rs. 100/- PMT. The Pitch as manufactured by the noticee does not merit classification under sub-heading No. 2708.11 because no process of blending is undertaken for the manufacture of pitch; rather the tar oils remain in the pitch in the natural course of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the process as is applied to the manufacture of PCM. The only difference lies in the ratio of pitch and tar oils. The ratio of pitch and tar oils as contained in Road Tar is 4:l. Thus, it is amply clear from the above that both the products 'PCM' & 'Road Tar' are obtained by blending pitch and tar oils and therefore, both the products merit for classification under Tariff sub-heading No. 2708.11. 18.1. From the above manufacturing process as submitted by the noticee, I find that they have deliberately given a misleading declaration to the effect that tar oils are readded to tar to produce reconstituted tars whereas the noticee have themselves admitted that when tar is heated most of the oils and other compounds are taken out. Thus, the residue product containing negligible quantity of tar oils which remain during the natural course of distillation, is 'pitch' & not tar. I find that tar oils is added to this 'pitch' in a mixer to produce pitch blended with creosote oil & Road Tar. 19. I further find that the noticee in para 5.2.2 of the reply to SCN dated 16-2-1991 & in the statement of Shri Kuljeet Singh recorded on 13-10-1990 in answer to Question No. 4 have also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir factory, the conditions have not been fulfilled, the benefit of the Notfn. cannot be allowed to the noticee. 23. As regards their claim that the benefit of Notfn. No. 28/89, dated 1-3-1989 is applicable to PCM, I find that the said Notfn. fully exempts goods of Ch. 27 if they are used for the manufacture of other goods or used as fuel for the manufacture of such goods. In the instant case, I find that though the noticee has claimed that most of the PCM is used as fuel in the factory, they have not produced any evidence regarding the exact quantity used during the said period. Therefore, in absence of such evidence I am unable to accept their plea. 24. Now, coming to the noticee's plea that there has not been any mis-statement or concealment of facts, therefore, the extended period of limitation cannot be invoked. They argued that the process of manufacture was clarified as early as in 1984, therefore, the Deptt. had full knowledge of the same. 25. From the evidence on record, I find that the Asstt. Collector, Bhilai vide his letter No. IV/16/30-l/83/Val/Pt.-l/7317, dated 3-7-1984 had requested the noticee to examine the manufacturing process of coal-tar pitch. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable" and relied upon 1983 (14) E.L.T. 408, 1989 (42) E.L.T. 484 (T), 1992 (59) E.L.T. 191; 1992 (61) E.L.T. 682, 1984 (18) E.L.T. 612 and the following observation in para 26 :- "26. Regarding the notices's claim that their classification lists approved upto 28-2-1989 cannot be re-opened, I find that the noticee has misdeclared the products; Pitch, PCM & Road Tar, which resulted in misclassification of the same. Being a RBC Unit of the declaration on record. I, therefore find that the approved classification lists can be reopened by the deptt., when new facts came to the notice of the Deptt. The Supreme Court in the case of Elson Machine (P) Ltd. v. CCE - 1988 (38) E.L.T. 571 (S.C.) have held that : "Estopped - Classification List - Excise authorities not estopped from taking a view different than in the approved C.L. - No. estopped against law. Rule 173B of the C. Ex. Rules, 1944 and Section 11A of the C. Ex. Act, 1944". Similar views are held in the following decisions : 1. Classification list - approved - Deptt. not estopped from taking a different view. Rule 173B of C. Ex. Rules, 1944 [1982 (58) E.L.T. 508 (Cal)]. 2. Classification List - approved - Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, 1986 to September, 1990 on the purported allegation of misdeclaration and suppression of facts which according to the notice the noticee mislead the authority approving the Classification List V. FOR THAT, the learned Collector issued the notice calling upon the appellant to show cause as to why alleged differential duty should not be recovered from it purportedly under Rule 9(2) of the Rules read with Section 11A of the Act applying the extended period of time limit but did not call for any explanation as to why the classification already approved should not be revised and approved differently attracting higher rate of duty on the basis of which the purported demand of alleged differential duty has been raised. The Collector has thus reopened the assessments already completed without following the process of law. VI. FOR THAT, it is established law that once classification lists are approved, allegations as to misstatement and/or suppression of facts, is not at all sustainable and further, once it is approved by an Order that order is re- visable no doubt, but in accordance with the due process of law, otherwise it would defeat the very purpose of Section 35E of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;FOR THAT, the preliminary ground on the point of law, the impugned purported order is not sustainable and as such for deciding this appeal which is simply restricted in the purported demand of alleged differential duty, the purported revision of classification wrongly done without any authority of law is not rational and therefore deserves to be set aside on this ground alone. (XII) FOR THAT, S.A.I.L. produces Tars in its Durgapur Steel Plant (DSP), Rourkela Steel Plant (RSP), and Bokaro Steel Plant (BSP) as by-products. Proceedings were initiated in the matter of classification of Tars in different form in RSP and BSP. The Collector, Central Excise (Appeals), Calcutta in its Order-in-Appeal No. 65/BBSR/93, dated 12-10-1990 wherein he has directed that all Tars viz., Crude Tar, Road Tar and Special Tar should be classified under 2706.00 and pitch all sorts are classifiable under 2708.11. (XIII) FOR THAT, the impugned purported Order appealed against is liable to be quashed, vacating the purported demand of alleged differential duty which has been raised by a Notice dated 7-12-1990 pertaining to the period from March, 1986 to September, 1990, applying the extended per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, examining the process of manufacture adapted, which is termed and accepted it is to be determined whether 'fluxing' would be 'blending' as envisaged under heading 2708.11. The adjudicator has relied upon the dictionary meaning of the words 'fluxing' and 'blending' and the test report dated 8-8-1993, which states that the sample is mainly composed of pitch, but does not state that whether or not it contains 'Creosote'. He has also relied on the silence of the appellants as no comments were offered on chemical examiners report dated 18-8-1993. It was thereafter concluded that 'it is accepted that the tar oils which drip back into the pitch, remain in the material covered by distillation in the pitch' therefore he confirmed the classification under 2708.19. The Commissioner has disregarded the understanding of the process of fluxing given by Chief Chemist and accepted by Board vide Circular No. 88/1/83-Cx. 3, dated 9-4-1984 wherein it was prescribed. "The matter was further examined in consultation with the Chief Chemist. The Chief Chemist observed that, for Coal tar Pitch, there is an I.S.I. Specification (I.S. 216-1981) according to which Coal tar Pitch is classified into four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, this clarification on fluxing would be binding on the department. Ignoring of the same, in this impugned order, exhibits a predetermined mind. Following this Boards classification, we would find 'fluxing' to be understood and covered by word 'blending' used in item 2708.11 and would classify the resultant pitch accordingly. (b) As regards classification of PCM and Road Tar from the details given in the manufacturing process, we find PCM to be Pitch obtained from distillation of coal to be mixed in ratio of 1:1 with creosote to get PCM and ratio of 80:20 to get Road Tar. The reason given by Revenue that these products are obtained by blending and are therefore creosote under heading 2708.11 ignores the fact that they are not commercially understood as pitch or even technically as pitch, since admittedly they are further down stream products from pitch, which is obtained form distillation of coal. The Revenues argument, also ignores that 'reconstituted-Tars' would be covered under 2706 as the heading reads, irrespective of process of manufacture. Therefore, when commercially and technically it is no longer pitch and it cannot be covered under 2708 and it is 'reconstituted- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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