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TMI Blog2005 (4) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... nd return of the unconsumed quantity to IOC are by pipeline. The return is called Naphtha Return Stream . The payment for Naphtha by IPCL is on net quantity basis i.e. quantity originally supplied -minus - quantity returned. Naphtha is excisable. Therefore, IOC pays duty when it supplies Naphtha to IPCL. Similarly, when IPCL returns naphtha to IOC. It pays duty on the returned quantity. Both units avail duty paid by the other as Modvat credit. The Return Stream Naphtha was being classified under Tariff Heading 2710.14. which is specifically for Naphtha . Under the impugned order, the Commissioner held that the Return Stream Naphtha is liable to be classified under Heading 2710.19. We read the finding in the impugned order : I order classification of the product viz. so-called Naphtha Return Stream by M/s. IPCL which is in fact a mixture of C5 and C7 hydrocarbons generated from GOP/GAP and returned to M/s. IOCL for blending in MS Pool correctly classifiable under CESH 2710.19. The finding of the Commissioner is to the effect that on extraction of certain hydrocarbons from Naphtha, the remaining quantity has ceased to be Naphtha and is required to be classified as other item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods falling under chapter 27 of the said schedule, such quantity shall be excluded (Notification No. 75/84). The amount of naphtha consumed in the manufacture of the products shall be calculated by subtracting froth the quantity of naphtha received by the factory manufacturing the products the quantity of naphtha returned by the factory to a refinery, declared as such under sub-rule (2) of rule 140 of the Central Excise Rules, 1944 (Notification No. 27/89). The amount of natural gasoline liquefied, raw naphtha or reformed naphtha (C.5 + Reformate) consumed in the manufacture of the products shall be calculated by subtracting from the quantity of natural gasoline liquefied, raw naphtha or reformed naphtha (C.5 + Reformate) received by the factory manufacturing the products, the quantity of natural gasoline liquefied, raw naphtha or reformed naphtha (C.5 + Reformate) or a mixture thereof returned by the factory to a refinery, declared as such under sub-rule (2) of rule 140 of the Central Excise Rules, 1944. (Notification No. 102/90). The appellant has also submitted that the demands are time-barred inasmuch as no materials had been suppressed from the departmental auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clarification under heading 2710.14 or the same has to be classified under heading 2710.19 as other . For better appreciation of the two contending entries, the same are reproduced below :- 2710 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 constituents of the preparations. - Motor spirit, that is to say, any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25 C, and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines; 2710.11 -- Special boiling point spirits (other than Benzene Tolule) with nominal boiling point range 55 - 115 C 20% 2710.12 -- Special boiling point spirits (other than Benzene, Benzol, Toluene and Toluol) with nominal boiling point range 63-70 C 20% 2710.13 -- Other special boiling point spirits (other than Benzene, Benzol, Toluene and Toluol) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleaning solvent. 2. Aromatic solvent coal tar, either solvent naphtha or heavy naphtha. GRANT HACKH S CHEMICAL DICTIONARY (I) Hydrocarbons, C6H14 to G7H18, b. 70-90. from the distillation of petroleum, coal tar, and shale oil. (2) Gasoline. (3) A bitumen, q. v. boghead Photogen. Coal tar Mainly benzene and its homologs. Petroleum - Mainly alkanes and naphthenes distilled from crude oil. Shale Ligroin. It contains alkenes and alkanes. Solvent - A coal tar distillate. Wood Mainly methyl alcohol and acetone, obtained by the distillation of wood; a solvent and denaturant for alcohol . CHAMBERS SCIENCE AND TECHNOLOGY DICTIONARY Naphtha (Build) A highly volatile solvent distilled from coal tar or petroleum . Naptha (Chem.) A mixture of light hydrocarbons which may be of coal tar, petroleum or shale oil origin. Coal tar naptha (boiling range approx. 80- 170oC) is characterised by the predominant aromatic nature of its hydrocarbons. Generally petroleum naphtha is a cut between gasoline and kerosene with a boiling range 120-180 C, but much wider naphtha cuts may be taken for special purposes, e.g. feedstock for high temperature cracking for clearing ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn stream of raw naphtha stands resolved and both the aforesaid units can follow the Modvat route. G.7 The process carried out by the aforesaid two assessee on the naphtha is similar to the process carried out by the appellants on the naphtha. In any case, the naphtha had been processed by these assessee and thereafter the return stream is cleared. Even then the department had accepted the return stream as naphtha. 13. Non acceptance of these exchanges by the Commissioner on the ground that these documents were internal communications is not appreciated inasmuch as these documents though not circulated for public benefit but reflecting upon the department s understanding and highlighting the Board s, which is the Apex body, can be relied upon by the assessee in support of their case. Apart from the fact that demand is not sustainable on merits, it is also seen that the same is hopelessly barred by limitations. From the sequence of evidences narrated above it is clear that after the goods falling under Chapter 27 were introduced to Modvat scheme, a doubt has arisen about the correct classification of return stream naphtha. Samples were taken and the opinion of the Chief Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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