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TMI Blog2014 (12) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-C.E., dated 1-3-2006 - Entry at serial No. 27. There is no dispute about the classification of the imported goods or the description given in the bill of entry. The goods i.e. 'commercial propane' is classifiable in Tariff Entry 2711 12 00. The scope of the term 'liquefied petroleum gases (LPG)' used in the said Notification/entry is not defined in the Notification. 3. Before we go into the details and rival contentions, we may look at the corresponding tariff entries and the exemption Notifications. Before 28-2-2005, the Central Excise Tariff used to have six digit and from 28-2-2005 onwards it became eight digit. The relevant entries in the six digit were as under :- "27.11 Petroleum gases and other gaseous hydrocarbons - Liquefied : 2711.11 -- Natural gas 2711.12 -- Ethylene, propylene, butylene and butadene 2711.19 -- Other - In gaseous state : 2711.21 -- Natural gas 2711.29 -- Other" After the introduction of eight digit, the said entries were splitted up and became as under :- "27.11 Petroleum gases and other gaseous hydrocarbons - Liquefied : 2711 11 00 -- Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 8% under Entry No. 27 of Notification 4/2006. Almost similarly worded orders were issued in respect of the remaining three appeals also. The Revenue is in appeal against the said four orders. 6. The main ground in appeals is that in common/commercial parlance, liquefied petroleum gas is a mixture of propane and butane classifiable under CTH 2711 19 00 whereas the goods imported in this case is commercial propane in liquefied form classifiable under CTH 2611 12 00. The concessional rate of 8% under Notification No. 4/2006-C.E., dated 1-3-2006 is applicable only to liquefied petroleum gases whereas the goods imported are commercial propane and, therefore, the benefit of the said Notification is not available. 6.1 The Revenue also contended that it is settled law that the words and phrases used in taxing statute which are not specifically defined therein must be understood in popular and commercial parlance. The Revenue also quoted the Hon'ble Supreme Court's judgment in the case of Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh reported in 1981 (8) E.L.T. 325 (S.C.) to make a case that resort should not be made to the scientific or tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LPG has to be limited to the goods classifiable under CTH 2711 19 00. 6.5 During the arguments, the above-mentioned points were reiterated by the learned Commissioner (AR). In addition to the above points, the learned AR produced a letter F. No. 354/57/2006-TRU (Vol. 3) dated 12-8-2013, wherein on a reference from the Chief Commissioner of Customs, Mumbai and the Commissioner (AR), the Ministry has clarified as under :- "2. LPG is produced by mixing butane and propane in such a way that it meets the specification prescribed for LPG. During the relevant time (in FY 2004-05), when the impugned exemption was extended, LPG along with Propane and Butane were classifiable under sub-heading 271119 (Other). Subsequently, on being transposed to 8 digit level, Propane got classified under tariff item 27111200, Butane under 27111300, whereas the LPG remained under 27111900 as part of "Other". From the above scheme of classification, it is evident that LPG is a distinct item, other than Propane or Butane. 3. On perusal of the relevant records, it is noted that the excise duty on LPG was reduced from 16% to 8% in 2004 in order to moderate the impact of high international oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an interpretation that is being advanced by the Revenue is to be taken correct, then there was no need whatsoever of mentioning sub-headings 2711 12 00 and 2711 13 00. 7.1 The learned advocate's other contention is that the Revenue, on the basis of some argument, cannot limit the scope of exemption Notification to one Tariff item when the Notification itself covers three different Tariff items and in view of this position, there is no case for the Revenue. The learned advocate also emphasizes that the Notification does not use the words 'liquefied petroleum gas' but uses the words 'liquefied petroleum gases (LPG)'. This itself implies that the said entry covers different types of LPGs and there is no dispute that propane is a type of liquefied petroleum gas. The learned advocate also argued that the Tariff itself recognizes propane as petroleum gas and in liquefied form as a liquefied petroleum gas. The learned advocate also argued that the ISI Specification mentioned by the Revenue in the show cause notice itself recognizes that liquefied petroleum gases mainly consist of one or more of propane, propylene, butane, isobutene and butadiene. The learned advocate also argued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 8% which was actually paid by them. If the department would have charged 14% at the time of clearance, they were entitled to take credit of 14% and therefore there is no gain to the respondents by taking the benefit of the said Notification and the exercise is really a revenue neutral exercise and on this ground also, they are entitled to relief as held by the Hon'ble Supreme Court in the case of CCE, Pune v. Coca-Cola India Pvt. Ltd. reported in 2007 (213) E.L.T. 490 (S.C.). Learned counsel for M/s. Essar Steels Ltd. also argued that in their case commercial propane imported and subject matter of dispute was in fact used as fuel. 8. We have considered the rival submissions. Undisputed facts are that the goods imported were described in the bills of entry as commercial propane. There is no dispute on the said description of the goods. Similarly, there is no dispute about its coverage under Tariff item 2711 12 00. The main contention of the Revenue in the appeal filed is that the term 'liquefied petroleum gases (LPG)' used in the Notification 6/2006 is to mean LPG which is used as fuel and is commonly understood by public in general. Thus, the Revenue's contention is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as fuel. Other respondent, namely M/s. Reliance Industries Ltd., has imported commercial propane for manufacture of goods in their factory at Nagothane, Maharashtra. Thus, in our view, liquefied petroleum gases (LPG) is a term which is generic in nature and covers a wide range of petroleum gases which are in the liquefied form. Propane is one of such gas. 10. We have gone through various entries in Central Excise and Customs Notifications and we observe that even these Notifications recognizes the fact that LPG in addition to fuel is also used for the manufacture of various items, for example, entry at S. No. 28 of Notification 4/2006 (which is under discussion) covers the entry as under :- "28. Liquefied Petroleum Gases (LPG) received by the factory from the refinery intended for use in the manufacture of Propylene or Di-butyl Para Cresol (DBPC) and returned by the factory to the refinery from where such Liquefied Petroleum Gases (LPG) were received. Explanation. - For the purposes of the exemption, the amount of Liquefied Petroleum Gases consumed in the manufacture of propylene shall be calculated by subtracting from the quantity of Liquefied Petroleum Gases receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the term as envisaged in the Tariff will be applicable. As per our analysis, in the Tariff "liquefied petroleum gases" would cover propane and therefore propane would be chargeable to concessional rate of duty as per the entry in the Notification. 13. The appellants' main contention is that the term 'liquefied petroleum gases' used in the Notification refers to the gas which is used as fuel. It may be true that in general the public understands the liquefied petroleum gases to mean LPG which is used as fuel but that is not so, as far as the Central Excise or Customs Notifications, Central Excise or Customs Tariff are concerned. 14. We have gone through the ISI Specification relating to liquefied petroleum gases which has been quoted both by Revenue and respondents. In the said ISI Specification, in the beginning it is stated that the term applies to a mixture of certain light hydrocarbons derived from petroleum. Clause 3.1.1 further clarifies that LP gases mainly consist of one or more of the specified hydrocarbons. Propane is one of the specified hydrocarbons. Para 3.1.2 also states that a small quantity of ethane, ethylene, pentane and pentene may also be present in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff, the Notifications use the term for both as fuel or as input for manufacturing. The scope of the term in the Tariff is being taken for purpose of Notification. We do not consider it necessary to discuss number of other judgments quoted by the respondents or the appellant. 16. We have also gone through the Ministry's letter dated 12-8-2013 submitted by the learned Commissioner (AR) during the course of the hearing. We do not find any basis of stating that LPG is produced by mixing butane and propane in such a way that it meets the specification prescribed for LPG. Even if that is so, the proper course for the Government would have been to include such specification in the Notification. It would have also been appropriate to include the end-use if the intention was to restrict the benefit of concessional rate to LPG used for fuel only. In the absence of such stipulation in the exemption Notification, the benefit of concessional rate of duty cannot be restricted to LPG used as fuel but would be applicable to all types of liquefied petroleum gases falling under Headings 2711 20 00, 2711 13 00 and 2711 19 00. 17. We also note that the learned Advocate for the respondent i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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