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TMI Blog2018 (4) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... , Special Counsel (A.R.) for Appellant Shri V. Sridharan, Senior Advocate Ms. Anjali Hirawat, Advocate for Respondent Per: Raju: This appeal has been filed by the Revenue against order of Commissioner dropping the proceeding initiated against M/s Bharat Petroleum Corporation Ltd. (BPCL) and Shri R. Ganesh, Project Manager of BPCL. 2. The respondent M/s BPCL manufactures various petroleum products from crude hydrocarbon oils or crude oils. During the period October 2000 to February 2006, one of the products manufactured by the respondent was described as Low Aromatic Naphtha (LAN). The respondent classifiable as 'Naphtha' under subheading 2710.14 of the CETA, 1985, while Revenue sought to classified the said product under sub-heading 2710.13 as "Other Special Boiling Point Spirit". Prior to 01.03.2005 the relevant headings were as follows:- Heading No. Sub-heading No. Description 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 constituents of the preparations. - Mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght oils, as defined in Sub-heading Note 4, not containing any anti-knock preparations, and with a difference of not more than 60oC between the temperatures at which 5% and 90% by volume (including losses) distil;" Sub-heading note 4 to Chapter 27 defines 'light oils and preparations" as follows: "4. For the purposes of sub-heading 2710.11, "light oils and preparations" are those of which 90% or more by volume (including losses) distil at 210°C (ASTM D 86 method)." 2.1 Learned AR pointed out that there are three kinds of Special Boiling Point (SBP) spirits under sub-headings 2710.11, 2710.12 & 2710.13. Volume sub-headings 2710.11 & 2710.12 boiling point range, these entries that for classification of the product under subheading 2710.13, no boiling point range is specified. He argued that since sub-heading 2710.13 no boiling point range is specified. Thus, boiling point range is no criterion for its classification. 2.2 Learned AR argued that SBP spirits are Hydrocarbon oils having boiling point range from 35 Degree Celsius to 165 Degree Celsius. Criterion for its classification being for a volumetric distillation test as per which 5% volume to 90% volume of the product sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13/2710 1113. Learned AR also argued that even individually satisfies the volumetric distillation test for SBP spirits and thus merits to be classified as SBP spirit. For this circumstance, he has relied on the table derived from the test results as under:- Name of the stream Temperature at which 5% volume is distilled Temperature at which 90% volume is distilled. Difference between two temperatures. SP 1 Top 34 deg. C. 051 deg. C. 17 deg. C. SP 2 Top 41 deg. C. 060 deg. C. 19 deg. C. SP 3 Bottom 88 deg. C. 114 deg. C. 26 deg. C. Stab. Nap. 59 deg. C. 112 deg. C. 53 deg. C. 2.5 Learned AR further pointed out LAN is a product different from the Naphtha. He argued that Naphtha is obtained by cracking of crude oil and as boiling range of temperature from 30°C to 325°C. He argued that LAN manufactured by BPCL is a blend of specified refined streams having boiling point range of 34°C to 160°C. He argued that the product manufactured by BPCL is actually 'Other Special Boiling Point Spirits'. 2.6 Learned AR relied on the decision of the Tribunal in the case of Saurashtra Chemicals, Porbandar Vs. Collector of Customs, Bombay - 1986 (23) ELT 283 to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of 'Motor Spirit' under Chapter heading 27.10. Learned AR argued that the respondent themselves had classified the disputed product as Naphtha under the same brought classification of motor spirits where the 'Other Special Boiling Point Spirits' are classified. 2.9 Learned AR further pointed out that the Learned Commissioner has referred to certain notifications, namely, Notification Nos. 190/75, 75/84, 27/89 and 102/90 which exempted naphtha used in the manufacture of certain specified final products. The method as explained in the notification, for example, Notification No. 27/89 was as follows: "The amount of naphtha consumed in the manufacture of the products shall be calculated by subtracting from the quantity of naphtha received by the factory manufacturing the products, the quantity of naphtha returned by the factory to the refinery.........." Learned Commissioner has accepted the contention of the assessee that the remnant naphtha, returning to the refinery after extraction of certain specified product is naphtha only. It is submitted that notification does not settle the classification of the product. Hence reference to the notification(s) is not appropriate. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tariff items 2710 11 11, 2710 11 12 and 2710 11 13)" means light oils, as defined in Sub-heading Note 4, not containing any anti-knock preparations, and with a difference of not more than 60oC between the temperatures at which 5% and 90% by volume (including losses) distil;" Sub-heading note 4 to Chapter 27 defines 'light oils and preparations" as follows: "4. For the purposes of sub-heading 2710.11, "light oils and preparations" are those of which 90% or more by volume (including losses) distil at 210°C (ASTM D 86 method)." So far as the first issue is concerned the revenue had relied on the following test reports of the four streams which go into the LAN pool as well as sample of LAN ANALYSIS OF SAMPLES (LAN TK, SP 1 TOP, SP 2 TOP, SP3 BOTTOM, STAB. NAP.) LAN from Tank TK 521 SP I Top (RFU) SP 2 Top (NSU) SP 3 Bottom(NSU) Stab. Nap. (HCP) Date 30.05.05 31.05.05 31.05.05 31.05.05 31.05.05 Time 1430 Hrs 1300 hrs 1335 hrs 1345 hrs 1230 hrs Distillation by ASTM D:86 IBP °C, 41 31 35 85 43 5%v recovered @°C, 56 34 41 88 59 10%v recovered @°C, 59 35 42 89 61 20%v recovered @°C, 63 36 42 91 66 30%v recovered @°C, 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in spark ignition engines". From the above analysis it is apparent that the test results prove that the products answers to the definition of "Special Boiling Point Spirits" in all respects except the description that appears in the single dash entry in the heading. However, for classification under 2710.13 (prior to 1.3.2005) or to fall under the heading 2710 11 12 to 2710 11 19 (after 1.3.2005) the product also needs to answer to the definition of 'motor spirit' or to the description appearing in the single dash entry. Revenue has not undertaken any tests in this regard on the pretext that the original classification claimed by the respondents, i.e. 2710.14, was under the same single dash entry, a description which qualified the definition of 'motor spirit'. Thus there was no need to prove the same as it was an admitted position of the appellants. We find that it is not correct position in law. The onus is on revenue to establish that the goods answer to the description given in single dash entry (upto 1.3.05) and to the definition of motor spirit after (1.3.05). Since revenue has not even attempted to test the goods for this purpose it has failed to establish its claim to class ..... X X X X Extracts X X X X X X X X Extracts X X X X
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