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TMI Blog2010 (5) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... produced before us were found to be assessed provisionally from Jan. 93 to Feb. 94. - provisional assessment endorsements speak of assessment being provisional only in respect of Benzene and Toluene. No differential duty has been indicated in respect of other products in any of the assessment endorsements produced before us. In view of the fact that the provisional assessment memorandum was available upto Feb. 94 and thereafter clearly there was no provisional assessment memorandum, it has to be held that upto Feb. 94 assessment was definitely provisional. - E/2380/2006-MUM, E/3816/2003-MUM, E/40/2002-NB-C - A/167-170/2010-WZB/AHD/C-II/EB - Dated:- 21-5-2010 - S/Shri B.S.V. Murthy, Member (T) and Ashok Jindal, Member (J) REPRESENTED BY : Shri K.K. Anand, Advocate, for the Appellant. Shri T. Tiju, SDR, for the Respondent. [Order per : B.S.V. Murthy, Member (T)]. - Appeal No. E/2380/06-MUM is filed by the Revenue and other two appeals Nos. E/3816/03-MUM and E/40/02-NB-C are filed by M/s. Oswal Petrochemicals Ltd. (OPL in short). 2.The details of appeal No. E/3816/03-MUM are as under : Collector of Central Excise (as he was known then), passed a review o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emicals Ltd. - 2000 (126) E.L.T. 1232 (T). Accordingly, the classification is to be taken as to be under CSH 2202.10 and 2707.20 for Benzene and Toluene respectively as held in the said classification. (iv) Ethylene Propylene : The issue of classification of these items also stand resolved vide CEGAT decision in the case of IPCL v. CCE - 1993 (65) E.L.T. 545 (T) which states that the products are classifiable under CH 29 saying that - "though specifically mentioned in sub-heading 2711.12 these are classifiable under CH 29 by virtue of Note 1(a) to Chapter 27 and Notes 1(a) and 2(c) to Chapter 29 of Central Excise Tariff Act, 1985 as amended by Finance Act, 1986 because they are separate chemically defined organic compounds of high purity and for that reason not eligible for exemption under Notification No. 276/67-C.E. Accordingly, these products are to be classifiable under Ch. 29." 3. As regards Appeal No. E/40/02-NB-C, the details, in brief, are as under : The department issued the following show cause notices wherein it was alleged that the appellants had wrongly classified Benzene and Toluene under Heading 2902 whereas the correct classification for Benzen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, he confirmed duty demand in respect of Benzene, Toluene, Ethylene and Propylene without benefit of exemption Notification No. 276/67 and Driploene-C without benefit of Notification No. 75/84-C.E. On appeal filed by OPL, the Commissioner (Appeals) upheld the demand excepting certain portion which was already covered. The matter was brought before Tribunal and Tribunal vide Final Order No. S/486/WZ/05/C-I, dt. 31-5-05 observed that the demand needs to be re-quantified and the matter was remanded to the Commissioner (Appeals). 5.In the impugned order, the Commissioner (Appeals) noted that entire duty demand was based on 0-41 register which is maintained chapter-wise by the jurisdictional Central Excise officers. Further, even though the Tribunal had directed that RT-12 returns should be provided, the department could produce only a few RT-12 returns. Finally, in the impugned order, the Commissioner (Appeals) held that there was no provisional assessment and the demand was based on 0-41 register and the department could not provide all the RT-12 returns and therefore set aside the demand. 6.Heard both sides. Appeal No. E/3816/2003 : 7.The first issue is with regard to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same has been finally upheld by Hon'ble Supreme Court also. 7.2.1 However, the learned advocate submitted that the decisions in the past cases by the Tribunal would not be applicable to the present case. He submitted that classification of Benzene and Toluene depends upon its purity. If it does not distill 1% to 96% volume within 2°C range, the same is classifiable under Heading 2707.10 and 2707.20 respectively. However, if product distills 1% to 96% by volume within 2°C range, these two products would be classifiable under Heading 2902. A perusal of the judgment of the CESTAT would clearly show that the classification of Benzene and Toluene depend upon its purity. CESTAT in the appellant's case supra, has relied upon HSN Notes which provide that if the purity of these products is more than 96% then these two products are classifiable under CH 2909. In the case before CESTAT, the department had relied upon some chemical test reports of appellant's lab, wherein the purity of the Benzene and Toluene was less than 96%. On the basis of that evidence, CESTAT came to the conclusion that Benzene was classifiable under Heading 2707.10 and Toluene under Heading 2707.20. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be specified by the Collector of Central Excise in his order. The said test reports were admittedly not the part of such points which arose out of the act of approval of classification list by the Assistant Commissioner. The said test reports were of subsequent date and could not be made a point for determination in the review order. No evidence except the said test report was brought on record by the Revenue to prove that the act of approval of the classification of both the products by the Assistant Commissioner under Heading 2902 was not in accordance with law. Hence, the judgment of the CESTAT in the appellant's own case, supra, was not applicable to the facts of that case. The same could not be applied in a case where there was no evidence brought by the Revenue to prove that the purity of Benzene and Toluene was less than 96%. The Assistant Commissioner had approved the classification list after taking into account the relevant considerations including the provisions of Central Excise Tariff Act, HSN, process of manufacture etc. It is well settled law that act of approval of classification list is a quasi-judicial function by the Assistant Commissioner. Hence, the act of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be considered to have been communicated to the appellant as per law and whether the test report can be applied for future clearances etc. are being dealt with subsequently. In view of the time lag between the remand order and the earlier decisions of the Commissioner (Appeals), no purpose would have been served by fresh adjudication. In any case, as per the provisions of Section 11A of Central Excise Act, 1944, the show cause notice was required to be issued for recovery of differential duty. Further, it is to be noted that the show cause notice issued on 26-3-91 takes care of revision of classification as well as demand for differential duty. Therefore, even if we accept the contention of the appellant that classification should not have been revised by the Commissioner (Appeals), it may be of academic interest only. In view of this position, we do not consider it necessary going into this issue and give our conclusion since what we are concerned with is mainly the demand for differential duty of Rs. 1.97 cores in respect of Benzene and Toluene for the period from Sept. 90 to Dec. 92 in the eight show cause notices issued by the department which we have dealt with separately. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ETH 2707.10 and 2707.20 respectively. 8.1 First submission was that in this case principles of natural justice have not been observed inasmuch as the test report was not communicated to the appellant. It was submitted that the advocate on behalf of the appellant had requested for a copy of the report in his letter dt. 19-4-91 and subsequently request was made on 14-2-92, 3-6-92 and 24-4-93. Learned counsel submitted that this claim was made during personal hearing also and since test report was not supplied, there was a violation of Rule 56(2) of Central Excise Rules under which the appellants would have got an opportunity to request Assistant Commissioner of Central Excise for re-test of the sample as permissible. Further, it was also submitted that no sample was drawn during the period covered by the show cause notice. Subsequently, the appellants had upgraded their manufacturing process, published the literature for reference of their customers which was submitted at the time of personal hearing on 24-1-01. Further, they had also submitted copies of the test report of the test conducted in their own laboratory whereby the purity of product was found to be more than 96%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention that in the event of department communicating copy of the actual report duly signed by the chemical examiner, they would have requested for re-test and in the absence of communication, they have been deprived of their right. It is not the conclusion that emerges from the facts discussed above. If there was at least one letter after receipt of test result till personal hearing in 2001 informing the department of upgradation of facilities, result of laboratory of OPL and seeking re-test, this claim would have been sustainable. It is all the more surprising that appellants did not seek re-test when the results were negative and they had upgraded the facility. 8.4 Learned advocate relied upon the decision of the Tribunal in the case of Award Packaging v. Collr. of C.E. Mumbai - 1994 (71) E.L.T. 55 (Tribunal) in support of his contention that non-communication of test report to assessee promptly is violative of principles of natural justice. Before we consider this decision, we would like to reproduce the relevant portion containing facts. "Briefly stated that the facts of the case are that the appellants who are engaged in the manufacture of printed cartons falli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in 1994 (73) E.L.T. 366 (Tribunal), held that if the contents of the results of the test is communicated even if a copy of the test report is not communicated, principles of natural justice cannot be said to have been violated. 8.5 Under these circumstances, we cannot accept the contention of the learned advocate that the department withheld the test report and prevented them from getting re-test done. Further, we are also unable to accept the submission that the appellants came to know that the department relied upon the test report dated 17-1-91 for all the 8 cases only from the adjudication order. Admittedly, all the 8 show cause notices have been identically worded. Admittedly, the appellants were writing letters for communication of test result. From the records, we find that the appellants never asked for re-test and obviously without knowledge of the OPL, no sample could have been drawn and therefore obviously all the show cause notices relied upon the report dated 17-1-91 only. Therefore, we cannot accept the contention that only from adjudication order OPL came to know that the department had relied upon the test report dated 17-1-91 in respect of all the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case. In this case, admittedly, sample was drawn in the presence of OPL representative and the result was communicated to the appellant who did not challenge the result and did not seek re-test thereby enabling the department to conclude that the products do not have purity of more than 96%. It was for the OPL to rebut the findings. Learned advocate also relied upon several decisions in support of his contention that the result of the test report can be applied only to the particular consignment and not to subsequent clearances. However, the learned SDR produced several decisions in support of his contention that the test report relating to a sample drawn on a particular date would remain valid till another test is conducted or re-test is done. In case of Bojaraj Textiles Mills Ltd. v. Astt. Collr. of C.E. as reported in 1990 (45) E.L.T. 559 (Mad.), Hon'ble Chennai High Court held that the test result of the sample deemed to govern production of yarn till the next drawal of sample. In the case of SRF Ltd. v. CCE, Chennai as reported in 2005 (191) E.L.T. 1154 (Tri-Chennai), it was held that duty can be demanded for entire period of dispute on the basis of test report of sampl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly relied upon by the Revenue, the same cannot be applied for subsequent period; there was no communication of the test report; that OPL had upgraded their manufacturing process. 8.7 Another submission made by the learned advocate was that during the period, the appellants were filing classification list. Department has not shown that the classification list was approved in respect of Benzene and Toluene under CETH 27 for the subsequent period after 3-11-89. Admittedly, the show cause notices were being issued regularly after March 91 for deciding classification as well as liability to duty and it is not the contention of the appellant that any of the show cause notice was time barred. In all the show cause notices, it was mentioned that the products are classifiable under CETH 27. OPL has not produced any classification list subsequent to 3-11-89. Instead they want the department to produce approved classification list showing the classification of Benzene and Toluene under CETH 27. If the classification list filed subsequently by OPL was approved classifying Benzene and Toluene under CETH 27, OPL would have got copies of approved classification lists but no approved CL ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries Ltd. v. CCE Surat as reported in 2009 (233) E.L.T. 210 (Tri-Ahmd.) is also misplaced. Learned advocate obviously relies upon only head notes which reads as "Test Report - Evidentiary value - Test reports to be made applicable only to lot out of which samples drawn." Whereas the relevant paragraph No. 16 in the decision is reproduced as under : "16. We also note that the test reports of Chemical Examiner furthered the Revenue's case and no arguments stand advanced by the appellant except to the extent that the test report of the samples cannot be made applicable in respect of clearances made in the past. While we agree that test reports should be made applicable only to the lot out of which samples are drawn but we find that in the instant case the Revenue's case is not only solely based upon the said test reports. As discussed earlier, there is ample evidence available on record to reflect upon the clandestine modus operandi adopted by the appellant. The test report only establishes the Revenue's case that good quality staple fibre was received in the guise of waste and was the starting point of investigations. The result of investigations, in the shape of statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing until reviewed. He has also relied upon several decisions of the Tribunal. 9.1.2 The department in the appeal memorandum has relied upon the decision of the Tribunal in case of Rajeev Mardia as reported in 2001 (129) E.L.T. 334 (Tri-LB), wherein it was held that even if no bond was executed or provisions laid down under Rule 9B were followed, the assessment has to be treated as provisional till classification was not finalized. 9.1.3 Further, it has also been pointed out that OPL themselves had written a letter vide No. C/217/01 in 1989 wherein OPL had spoken about execution of bond in connection with provisional assessment of the goods covered under Chapter 27. Further, several RT-12 returns other than what were produced before Commissioner (Appeals) were produced by learned Jt. CDR. On going through these RT-12 returns, it was noticed that quite a few were provisionally assessed. RT-12 returns produced before us were found to be assessed provisionally from Jan. 93 to Feb. 94. Further, RT-12 returns relating to March 94 onwards, May 94, Apr. 95 to Mar. 96 were also produced. We find that subsequent to Mar. 94, there is no endorsement to the effect that assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) had held that the demand for differential duty confirmed in respect of Ethylene and Propylene cannot be sustained. We find that this observation also remains unchallenged by the Revenue. Further, the observations of the Commissioner that the decision of the Dy. Commissioner regarding classification of these products has not been made without recording any reason. Further, he has also observed that rate of duty was same irrespective of the heading and therefore the demand for differential duty could not have been arrived. This observation has also not been challenged. 9.4 As regards Cyclo Hydro Carbons, we have already observed that in absence of chemical test, no further action could have been taken by the department. 9.5 In the result, except for Benzene and Toluene in respect of differential duty demand arrived for the period Jan. and Feb. 93, which is not covered by show cause notices already issued and which are the subject matter of appeal No. E/40/02-NB-C, all other demands on merit also cannot be sustained. 9.6 Even otherwise, as already observed by us in RT 12 returns which have been produced before us as detailed above, we find no endorsem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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