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TMI Blog2003 (9) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... ream). (c) The appellants take Modvat credit of the duty paid on C4 Raffinate received from IPCL. When the C4 Raffinate (Return Stream) is sent back by the appellants paid duty on C4 Raffinate (Return Stream) at the rate specified in respect of goods falling under sub-heading 2711.19. (d) By a show cause notice dated 9-1-2002, the appellants were directed to show cause as to why the differential duty of Rs. 94,87,425/- should not be demanded on the C4 Raffinate (Return Stream) on the ground that the same would be classifiable under sub-heading No. 2711.12 attracting higher rate of duty than the goods falling under sub-heading 2711.19. (e) The appellants filed a detailed reply to the show cause notice, inter alia, contending : (i) C4 Raffinate (Return Stream) cannot be classified under heading 2711.12 since sub-heading 2711.12 covers specific petroleum gases like Ethylene , Propylene , Butylene and Butadine and the C4 Raffinate is the mixture of hydro carbons that cannot be classified as specified petroleum gas. (ii) The extended period of limitation under Section 11A cannot invoked since there was no suppression of facts on the part of the appellants w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y @ 8% and in fact, C4 Raffinate is put to a process of polymerization and Polyisobutylenes of different grades are manufactured. Hence, clearance of C4 Raffinate (Return Stream) cannot be treated as input clearance as such. Further, C4 Raffinate (Return Stream) contains predominantly Butene/Butylene i.e. approx 61% to 83%. From July, 2001 onwards, the assessee has stopped putting the remark of removal of inputs under Rule 57F(2)/57AB(1) on the C. Ex. Invoices and in the RT-12s/E.R. 1s which clearly indicates that they were with mala fide 57F(2)/57AB(1). The Explanatory notes of Harmonized Commodity Description and Coding System states that Chapter Heading 27.11 cover crude gaseous hydrocarbons obtained as natural gas or from petroleum or produced chemically. Further, it states that Chapter sub-heading 27.11 include in particular Butenes (butylenes) less than 90% (Butenes not less than 90% pure fall in Heading 29.01). The Chapter sub-heading 2711.12 has a mention of butylenes - whereas Chapter sub-heading is for other liquefied Hydrocarbon gas. From this, it appears that liquefied Hydrocarbon gas having less than 90% content of butylenes/butene is classifiable under chapter sub-h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Butene-1 43.31% (ii) Iso-Butene 12.16% (iii) T-Butene-2 16.07% (iv) C-Butene-2 11.39% Before sending C4 Raffinate (Return Stream) samples were drawn and the contents and the percentage of the contents were analyzed. This analysis of Raffinate (Return Stream) was done on a daily basis and a report was prepared which was known as G.C. analysis report. Approximately 83% of C4 Rafiinate (Return Stream) had butylenes (butanes). 31. I find that the ratio of the judgment Cochin Refinery Ltd. v. CCE, Cochin - 2001 (132) E.L.T. 619 (Tri.), Dated 25-4-2001 cited by the assessee is not applicable in the present case for the following reasons : (a) In the Cochin Refinary case LPG was the carrier stream for carriage of Iso-butylene (iso-butene) whereas in the instant case there is no carrier stream as such. (b) The condition as prescribed by HSN Notes to classify Iso-butylene under Chapter 29 is 90% purity, whereas in the case cited (supra) the percentage of isobutylene (isobutene) in incoming input is in the range of 24% to 26% and the percentage of isobutylene (isobutene) in outgo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eam) after the polymerization of Iso-butene (Iso-butylene) and the percentage of the composition of the above mentioned compounds in C4 Raffinate (Return Stream) at the time of clearance. It is apparent that the composition after polymerization of C4 Raffinate (Input), generally in an acid, does not remain the same. Butenes (butylenes) are principal compound which participates in the polymerization reaction. From the G.C. Analysis report and the report prepared by the Quality Control Department of the assessee it was apparent that C4 Raffinate (Return Stream) contained predominantly Butenes (butylenes) up to 83%. The Harmonised Commodity Description and Coding System states that the Chapter sub-heading Number 27.11 includes in particular Butenes (butylenes) less than 90%. The Chapter sub-heading Number 2711.12 had a specific mention of Butenes (butylenes) whereas Chapter sub-heading Number 2711.19 was for other liquefied hydrocarbons such as Methane, Ethane, Propane, Butane, etc. Classification is based on the constituent which provide the material its essential character and use. The other constituents in C4 Raffinate (Input) like Propane, Ethylene etc. had no relevancy in the pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as the same . (Emphasis supplied) Revenue did not show any decision contrary to this case of M/s. Gujarat Petrosynthetic Ltd. When C4 Raffinate retained, is also to be considered as the same i.e. C4 Raffinate, as per this finding of Tuhuual and Government s (read Revenues) acceptance of the position, if has to be held that Inputs are being returned as inputs under the Modvat/Cenvat rules, if inputs are being returned as inputs, they cannot be classified as new elsewhere. The classifications can, however, be altered, if the input classification is changed i.e. incoming C4 Raffinate Stream is reclassified. (g) The C4 Raffinate Stream being cleared by M/s. IPCL and classification thereof is under re-consideration of the department, as submitted by the learned Advocate for appellants. If the stream being returned is also to be considered as the same which came to the appellants, and the two are not held to be different exigible goods in M/s. Gujarat Petrosynthetic Ltd., then the classification of the return stream has to be as per the classification of the incoming stream, in the case of M/s. Maharashtra Polybutene Ltd. Therefore, it would be in the int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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