9911796707
TMI Blog2005 (1) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by the appellants, under sub-heading 2711.12 and to deny the concessional rate of duty under Sr. No. 24 of Notification No. 6/2000-C.E., dated 1-3-2000 and Sr. No. 34 of Notification No. 3/2001-C.E., dated 1-3-2000 & to demand differential duty based on the aforesaid proposal was issued to the appellants. 2.2 (a) The basic ground given in the show cause notice is that the C-4 Raffinate constitute of various butylenes which taken together range from 72 to 76% and therefore the C-4 Raffinate would merit classification under sub-heading 2711.12 in view of Rule 3(a) read with Rule 3(b) of Rules for Interpretation of the Schedule to Central Excise Tariff Act, 1985. (b) This notice also proposed to invoke the extended period of limitation on the ground that the appellants did not disclose to the department the composition of C-4 Raffinate. It was further alleged in the show cause notice that the appellants deliberately suppressed the facts of presence of predominance of butylenes in C-4 Raffinate with intent to evade payment of duty. The following documents were relied upon in the show cause notice for the purpose of the aforesaid proposal :- (1) Pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual 20.1766 14 Iso-Butene 35.0% Min. 41.8663 15 t- Butene-2 Actual 7.1373 16 c- Butene-2 Actual 4.7836 17 1-3-Butadine 2.0% Max. 0.0179 18 Total Acetylene 0.35% Max. Traces 19 NMP 10 ppm Max. And as per Paragraph 5.5 of show cause notice (Tested at M/s. IPCL) is - Sr. No. Product Unit Content 1 Propane + Propylene % 0.01 2 Propadiene% % 0.01 3 Methyl Acetylene Ppm <25 4 1-3-Butadiene % Traces 5 1-2-Butadiene Ppm <25 6 Iso-Butane % 2.46 7 n-Butane % 9.24 8 Butene-1 % 32.85 9 Iso-Butene % 35.26 10 Trans-Butene-2 % 12.03 11 Cis-Butene-2 % 8.11 12 Ethyle Acetylene Ppm <25 13 Vinyl Acetylene Ppm <25 14 CSs ppm Ppm <25 15 Dinner Ppm <25 16 NMP Ppm <10 3.2 The appellants had classified C-4 Raffinate under 2711.19 as "other liquefied petroleum gases" and the said classification was approved by the Department as far back as in 1988. 4.1 Commissioner of Central Excise passed impugned Order-in-Original No. 13/BRC-I/MP/2003, dated 27-8-2003 holding (i) C-4 Raffinate to be classifiable under sub-heading No. 2711.12 and not eligible for concessional rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical Publication as under. 1. In Kirk-Othmer Encyclopedia of Chemical Technology (Volume 11) "Butylenes" "Butylenes are C4H8 mono-olefin isomers : 1-butene, cis-2-butene, trans-2-butene and isobutylene (2-methylepropene). These isomers are usually coproduced as a mixture and are commonly preferred to as the C4 fraction. These C4 fractions are usually obtained as by-products from petroleum refinery and petrochemical complexes that crack petroleum fractions and natural gas liquids." In terms of the definition of 'butylene' as given in Hawley's Condensed Chemical Dictionary, 'butylene' is one of the liquefied petroleum gases butane-1, cis-butene-2, trans-butene-2 and isobutene. In view of the definition, understanding of the entity 'butylene' as given, in other technical books, has to be constructed. (ii) The appellants also relied upon the specification of LPG as per IS 4576-1999 and the following documents for the purpose of establishing that the C-4 Raffinate (return stream) is nothing but liquefied petroleum gas an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be called as butylenes ("plural'"). Such a product containing mixture of isomers of butylenes would not be called butylenes ("singular"). (c) In the various sub-headings under Heading 27.11 of HSN there is a sub-heading 2711.13. In that sub-heading the term 'Butanes' is employed. In sub-heading 2711.14 singular Ethylene, Singular propylene, Singular butylene and Singular butadiene are referred. There is no reference to "plural" butylenes or "plural" propylenes in this sub-heading 2711.14 of HSN. There is a reference of the "plural" butanes in sub-heading 2711.13. This itself demonstrates that there is a clear cut distinction between "singular'' butylene and "plural" butylenes (we are not concerned with butanes in the present case). However, HSN has referred to only for showing the difference between "singular" butylene and "plural" butylenes. (v) The show cause notice had relied upon the Test Report dated 17-10-2001 in respect of the sample of C-4 Raffinate drawn on 8-10-2001. In terms of this report, the C-4 Raffinate consists of butene-1, iso-butene, t-butene, c-butene apart from iso-butane. Thus, the C-4 Raffinate is a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to classify a product as butylene, is to upheld then it must be shown by the department that it is bought and sold as butylene. The impugned order fails to establish that C-4 Raffinate is butylene meeting this test, in order to classify it as butylene under sub-heading 2711.12, the burden to establish this is squarely on the department as been held by the Apex Court in various decisions. The Commissioner without appreciating that the product in question is not bought and sold as butylene proceeded to hold that the appellants have not shown that the product is bought and sold as C-4 Raffinate that finding cannot be upheld. (x) The finding of the Commissioner that butylenes predominates and therefore it is C-4 Raffinate is classifiable under sub-heading 2711.12 is incorrect since the Commissioner had not appreciated the submissions, as made by the appellants, on the basis of definition of "butylene" and the difference between "butylene" and "butylenes". Hence the basis adopted by the Commissioner to classify C-4 Raffinate under sub-heading No. 2711.12, is not upheld. (xi) It is settled legal position that burden of proving that a product is hit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; A combined reading of the inclusion and exclusion notes would indicate that when constituent of butylenes is less than 90% in an entity under classification then it would remain classified under Heading 27.11 and when such percentage reach more than 90% they would be shifted to Chapter 29 of the Tariff read with the Chapter notes there under. Therefore, classification of a mixture, in the present proportations in this case, under 27.11 heading of the Tariff is confirmed. Proceeding for further sub-classification under sub-headings of 27.11, it is found the Tariff Heading 27.11 is divided into - Heading No. Sub-Heading No. Description of goods Rate of duty 27.11 Petroleum gases and other gaseous hydrocarbons - Liquefied : 27.11.11 -- Natural gas 16% 27.11.12 -- Ethylene, propylene, butylene and butadience 16% 27.11.19 -- Other 16% - In gaseous state : 27.11.21 -- Natural gas Nil 27.11.29 -- Other 16% the entity classified, under 2711.12 would be a 70% pure is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um gas, is incorrect. Once the product is liquefied petroleum gas, so long as it is not a natural gas, the same is covered by the exemption Notification No. 6/2000 and 3/2001. The classification of the product as to whether it would fall under sub-heading 2711.19 would not be relevant. 5.4 The Commissioner has mis-read the analysis report submitted by the appellants to Chief Controller of Explosives, Nagpur. The mixture of isomers of butylenes contained in the C-4 Raffinate was around 80%. The appellant's submissions on the difference between "butylenes" (singular) and "butylenes" (plural) does not appear to be understood by the Commissioner in the impugned order. The submissions & findings with regard to the difference between the term "butylene" (singular) and "butylenes" (plural) are based on the concept of butylene as given in technical book. The Commissioner appears to have deliberately and conveniently ignored the definition as given in Hawley's Condensed Chemical Dictionary. Hence, his observation that there is no difference between "butylene" (singular) and "butylenes" (plural), is incorrect and unsustainable in law & in facts. 5.5 As regards the eligibility to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded since it is not exclusively a or any 'butylene' but is a mix of 'butylenes'. In view of the findings arrived in paras supra. However, since C-4 Raffinate is liquefied petroleum gas it is covered by the description of the "Liquefied Petroleum gases and other gaseous hydrocarbons" under Sl. No. 24 of the above notification, Raffinate, even if it is assumed as butylene is not excluded from coverage of Sl. No. 24 of the Notification No. 6/2000, but would stand included in the first part of the Notification as liquefied petroleum gases. (iii) The order of the Commissioner on the question of availability of exemption Notification No. 6/2000-C.E., dated 1-3-2000 and No. 3/2001-C.E., dated 1-3-2001 is purely based on the intention of the legislature on the basis of the Finance Minister's speech. However, it is a well settled legal position that the notification has to be interpreted on the basis of plain meaning of words and intention behind the notification cannot be a basis to interpret the notification. Commissioner has not refuted any of the submissions made by the appellants, on the interpretation of the notification. If the interpretation of the department on S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g duty on C-4 Raffinate (Return Stream) cleared during the period from November 1984 to October 1985 alleging that GPL had dispatched processed goods/residue to the appellants under the guise of Return Stream. GPL was issued with Show cause notice dated 26-10-1989. The Collector of Central Excise, Vadodara who is having jurisdiction over the factories of the appellants and GPL passed order-in-original No. 9/MP9, dated 23-1-1991 holding that C-4 Raffinate Return Stream cleared by GPL is different in composition from C-4 Raffinate which was received by GPL from the appellants. This finding of the Collector itself shows that during the earlier proceedings against GPL, department had decided the composition of C-4 Raffinate as well as C-4 Raffinate (Return Stream). The only allegation in the show cause notice for invoking extended period of limitation is that the appellants did not declare the composition of C-4 Raffinate. On this basis it has alleged that there was suppression of fact. However, in view of the fact that in 1984 itself the department had & seen the Test Reports of C-4 Raffinate as well as C-4 Raffinate Return Stream, would confirm the fact that department was fully awa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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