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TMI Blog2018 (8) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... - in the instant case, the processes undertaken by appellants are not those beyond the cases listed therein - thus, there is no hesitation in holding that the impugned product is rightly classifiable under CTH 27090000. It was incumbent on the Department to immediately study the process of manufacture or to get it examined by an expert or by getting the samples so as to conclude that the process undertaken by the appellants amounted to manufacture and a clearly distinguishable product having a distinct name, character and use has emerged. This was not done so. Therefore, merely alleging that the burden was on the appellants is not acceptable - the onus of proving the classification is on the Department which has not clearly discharged the burden of doing so. Going by the process undertaken by the appellants, HSN Notes and the ratio of cases referred, it can be concluded that the product emerging out of the process undertaken by the appellants is rightly classifiable under CTH 27090000 - appeal allowed - decided in favor of appellant. - E/631/2009-DB - Final Order No. 21129/2018 - Dated:- 8-8-2018 - Hon'ble Shri S. S. Garg, Judicial Member And Hon ble Shri P. Anjani K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 27 of the Central Excise Tariff, the oil manufactured by them falls under CTH 27090000 in terms of HSN. The Tribunal in the case of Ok Play (India) Ltd. Vs. CCE 2005 (180) ELT 300 held that HSN is a safe guide for the classification. Petroleum oil is classifiable under CTH 27090000 as held in the following cases: (i) Rudraksh Petrochem Pvt. Ltd. Vs. CCEx, 2016 (342) ELT 393 (Delhi) (ii) CCEx. Vs. Bajrang Petro Chemicals Pvt. Ltd., 2017 (GST) 397 (Tri. All) (iii) Oil India Ltd. Vs. CCEx, 2002 (148) ELT 802 (Tri. Delhi) Commissioner Vs. Oil India Ltd., 2004 (170) ELT A116 (SC) 2.1. He also submitted that mere Dehydration does not amount to manufacture. He relied upon the following case laws: (i) Jayanti Oil products Pvt. Ltd. - 1995 (77) ELT 360 (Tri. Mumb) and Collector Vs. Jayant Oil Products (P) Ltd.- 2004 (164) ELT A69 (SC). (ii) Shyam Oil Cake Ltd. Vs. CCEx., Jaipur (174) ELT 145 (SC). (iii) UOI Vs. Delhi Cloth Mills 1977 (1) ELT (J199). 2.2 He further submitted that burden to prove the classification is on the Department as per the following cases: (i) Puma Ayurvedic Herbal (P) Ltd. Vs. Commissioner of C.Ex., Nagpur, 2006 (196) ELT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. The learned counsel conclude his argument stating that in case, the Hon ble Tribunal holds the goods to be classifiable as contended by the Department; duty may be computed on Cum Duty basis as held by the Hon ble Supreme Court in the case of CCE Vs. Maruti Udyog Ltd. 2002 (141) ELT 3 (SC). 4. The learned AR has reiterated the findings of the Commissioner and has submitted that the appellants have initially classified the goods under CTH 27090000 as per their letter dated 28.02.2007; however, as they have changed the classification on suo moto, the burden to prove the classification is on the appellants. The process undertaken by the appellants was not Dehydration, but was Distillation as held by the Commissioner in the OIO. As rightly held by the Commissioner, the process carried out by the assessee is nothing but the process of Distillation. The case laws cited by the appellants are not applicable. The burden of proof have shifted to the appellants after they have changed their classification, the appellants all the while claiming that on the basis of a misguided advice, they were trying to send the samples to a laboratory in Guindi; but later they came to know that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the components, the technique may be used to separate components of a mixture or to add in purification. 5.2 So, in industrial process, distillation is used to separate the desired product from a mixture of liquid. In the above process though water is coming out as vapour; however, it cannot said to be a desired product. The desired product is the remaining Crude oil. Had it been the intention of the appellants to produce water from the Crude oil; the process undertaken by them could have been technically called Distillation. However, no prudent person would produce water in a commercial manner by distilling Crude oil, therefore, the process undertaken by the appellants is nothing but removal of water from the Crude oil, it can alternatively be called Dehydration. It is not the case of the Department that they have subjected the process undertaken by the appellants to an expert opinion. It is also not clear whether the Superintendent has visited the factory and has given any report on the process undertaken by the appellants. 5.3. We find that as per the report given by the Chartered Engineer after visiting the Plant on 23.03.2007 that the Plant requires modifications for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice on the intended classification. It is not clear as to what action the Department has taken with reference to his submissions. Vide their letter dated 30.03.2007, they have given the process of manufacture also. It was incumbent on the Department to immediately study the process of manufacture or to get it examined by an expert or by getting the samples so as to conclude that the process undertaken by the appellants amounted to manufacture and a clearly distinguishable product having a distinct name, character and use has emerged. This was not done so. Therefore, merely alleging that the burden was on the appellants is not acceptable. 5.7. It is also seen that Audit Team of the Department has visited the factory from 20.08.2007 to 23.08.2007 and have issued an audit report wherein they have not raised any contentions regarding the impugned product of the process. Under the circumstances, it is not open for the Department to issue a SCN in April 2008 to recover the duty for the period from 2006 to 2008. 5.8. It was contended by the learned AR that the appellants activity in selling the off specification product to different boilers was illegal. It is not forthcoming from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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