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TMI Blog2003 (5) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... is that raw lignite received from the mines is crushed and it is dried for removing the moisture. The dried powdered lignite is compressed to solid briquette cakes and these cakes are sent to carbonisation plant where the volatile content of the raw briquette is removed. This yields products like middle oil, gas liquor, etc. The middle oil is distilled and in the process, phenol content is removed by extraction procedure and it leads to emergence of dephenalised oil. This dephenalised oil is used as fuel to generate steam, which in turn is captively consumed in the process internally. 3. The classification of dephenalised oil has a long history. The middle oil from which the dephenalised oil is derived was itself a subject- matter of dispute as to the classification. By his letter dated 18-7-1966 the Asstt. Collector of Central Excise, Salem informed the appellant that middle oil was a diesel oil falling under the then tariff item 9 and not furnace oil falling under the then tariff item No. 10 as originally decided and directed the appellant to take out L6 licence for use of middle oil as fuel for generation of electrical energy. It was later found that the middle oil could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct as Diesel Oil under Tariff 2710.39 and the Range Superintendent asked M/s. NLC to pay duty since no duty was paid earlier since the Asstt. Collector, Pondicherry said that we were exempted from duty. 8. However, the classification of the product under 2710.39/2910.40 (diesel oil) was suddenly found inappropriate since the chemical examiner opined that the aromatic constituents were predominant by weight in the DP oil. It is because of this view, show cause notices were issued from Jan., 88 to 31-5-94 demanding duty at the rate as applicable to CET 2707.90 from time to time. The Asstt. Commissioner who passed the order-in-original No. 67/97 rejected the classification proposed by the department since he found the non-aromatic constituents were more pronounced in the product than the aromatic constituents and that there was some error in the analysis made by the chemical examiner. Obviously he should have dropped the proceedings but strangely he thought it fit to re-examine the whole issue of classification of DP oil as Diesel Oil, thus going beyond the scope of the show cause notice. He held that DP oil was to be classified under 2710.90 i.e. other . This sub-heading was not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the order-in-original No. 67/97 he had accepted the same. The Asstt. Commissioner failed to consider the submissions made by NLC to the appeal filed by the department. In para 5, NLC submitted that the assessee s claim for classification under 2710.40 for the above period may be confirmed without any reference back for fresh classification . This was again reiterated in para 7 of the submissions. NLC did not file any appeal against order-in-original No. 67/97 inasmuch as the Asstt. Commissioner classified the product under a sub-heading which was not at all in existence thereby rendering his order inoperative. They were only waiting the response of the department and de-termination of rate of duty. In any case, the Asstt. Commissioner has failed in his duty to examine the classification issue afresh as directed by the Commissioner of Customs (Appeals). 11. It is submitted that in matters of classification, the burden is on the department especially when the product was classified by the department itself as diesel oil right from the introduction of the new Central Excise Tariff based on HSN. In this regard, the Hon ble Supreme Court s decision in the case of Hindust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment appealed to the CEGAT against the Collector s order and wanted to classify the product at the last residuary heading 2710.99 other as has been done in this case. The Tribunal considered and held as follows: - The heading indicates kerosene which is ordinarily used as an illuminant in oil burning lamps and aviation turbine fuel, that is to say, any hydrocarbon oil excluding mineral colza turpentine substitute which has a smoke point of 18 millimetres or more and has a final boiling point not exceeding 300 C. This entry; therefore, makes petroleum oil liable to tax under this entry provided it has a smoke point of 18 mm or more and a final boiling point not exceeding to these two basic specifications. The products admittedly also are petroleum oil within the meaning of Chapter 27. In this view of the matter considering that the products fully confirmed to the specification given in the Tariff the end-use would be irrelevant in this case. In this view of the matter, therefore, we uphold the impugned order and reject the Revenue s appeal . 16. It is seen from the trade notice as appearing in 1987 (30) E.L.T. T19 that the department would not object to classify the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. NLC also established by evidence that the product complied with the requirement of tariff heading 2710.40 as mentioned in the Central Excise Tariff. 21. The appellant submits that the structure of the products under heading 27.10 are in the following manner. 2710.11 to 2710.19 - deals with motor sprit suitable for use as fuel in spark ignition engines. 2710.20 to 2710.21 - deals with kerosene and aviation turbine fuel 2710.30 - deals with refined diesel oil 2710.40 - deals with diesel oil other than refined 2710.50 - deals with furnace oil used as fuel and not suitable in spark ignition engine 22. It may be seen from the structure of the Heading 27.10 that sub-heading 10, 20, 30, 40 and 50 deal with mineral oil which are mainly used for the purpose of burning either in the spark ignition engine or as fuel. The sub-headings 60 to 90 deals with such products, which are not used in burning in the spark ignition engine or as fuel. It is submitted that sub-heading 2710.90 is a residuary heading. It can cover only such products, which were not covered by the earlier sub-heading. Apart from the fact that sub-heading 90 covers only such products other than those used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r s Order No. V/68/30/75/83 M IV, dated 23-2-84. The background of the order was that the department raised the demand for duty on the DP oil on the ground that the DP oil was produced in B C Plant and was used in Steam Processing Plant which, according to the Department, was a different factory and therefore for the purpose of granting exemption, the movement of DP oil from B C Plant to Steam Processing Plant should have taken place under Chapter X procedure and inasmuch as NLC did not follow this procedure, the exemption availed was not correct in terms of Notification 118/75. The Asstt. Collector examined the issue, visited the factory and after considering the facts and circumstances and the evidence available, dropped the proceedings thereby upholding that the DP oil was used within the same factory where it was produced. It is further submitted that in terms of Notification 28/89 the goods should be used in the same factory in which it is produced for the manufacture of excisable goods or as fuel for manufacture of excisable goods. In the instant case, the fuel is used for generating steam which in turn is used for manufacture of excisable goods like carbolic acid, ortho cres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... description for the impugned product in the tariff earlier to 16-3-1995, as indicated below : Period Heading/Sub-heading No. Description of goods 1-3-1986 to 28-2-1994 27.10 Petroleum oils and oils obtained from bituminous minerals, other than crude; Preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic of the preparations. 2710.99 Other The classification of the impugned product under sub-heading No. 2710.99 is supported by Note 2 to Chapter 27 . 28. Displaying gross insensitivity to a quasi-judicial directive by fatuous reasoning is an inelegant demonstration of judicial indiscipline. It also reeks of indefensible authoritarianism. That is why public faith in the credibility of our quasi-judicial functioning has hovered around the low water mark. Irrespective of the position whether the appellant in the proceedings is the department or the assessee their fate is intertwined in that proceeding and decisions emanating have tangible implications for either side. Neither side can claim ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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