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TMI Blog2018 (11) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... t to demand special Excise Duty leviable under second schedule to the Central Excise Tariff Act. In appeal no. E/1094/2009, the order has been passed in denovo proceedings after the matter was remanded to Tribunal for fresh adjudication vide order no. A/1661/ WZB/D/08 dated 06/08/2008. The said order of Tribunal directed the Commissioner to consider the submission of the appellant on the decision of Tribunal in the case of Oil India Ltd. 2002 (148) ELT 802 (T) and with respect to eligibility of Notification no. 23/06 dated 01/03/2006 which granted exemption to Naptha from levy of special excise duty. 2. Ld. Counsel for the appellant pointed out when crude oil is subject to fractional distillation, it results in generation of a number of streams which are then refined into different products and captured at different temperatures and pressures in the column. 2.1 Ld. Counsel pointed out that natural gas which is mined at different places is transported through the Central processing facilities to different customers. The central processing facility is onshore installation, to process and handle the crude oil and natural gas produced in the oil field. Gas received from different oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "-." Ld. Commissioner has thus held that since product in question, fall under the definition of "Light Oil Preparations" as per Chapter Note, burden is not on the department to prove that product should also satisfy the definition of "motor spirit". 2.4 He argued that the Tribunal in the case of CCE Vs. BPCL has held that even under 8 digit tariff the department has to prove that product falling under 271011 13 satisfy the test of definition of 'motor spirit'. Therefore, to that extent findings in the impugned order are liable to be set aside. 2.5 He argued that under new 8 digit tariff also the above products stands grouped under 'motor spirit' and only those products which satisfy the definition of 'motor spirit' as per Supplementary Notes to Chapter 27, will be covered under the headings of 2710 11 11, 2710 11 12, 2710 11 13 and 2710 11 19. 2.6 Ld. Counsel pointed that the Commissioner has relied on the chemical examiner's report dated 06/04/2006 and according to which the sample of the product in question in admixture with motor spirit was also tested for octane number (RON). The RON was found to be 90.4 which indicated that the sample was suitable to use as fuel in spark i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote (a) to Chapter 27 as it stood after 1.3.2005. Hence, the contention in the show cause notice and the finding of the Commissioner of Central Excise in the impugned order that the product in question is suitable for use as fuel in spark ignition engine is wholly incorrect. 2.8 Ld. Counsel also relied on the following decisions: 1. Jagdamba Petroleum P. Ltd. Vs. CCE-2004 (163) ELT 88 (T) affirmed in 2007 (212) ELT A112 (SC) 2. Silverchem Industries Pvt. Ltd. Vs. CCE-2003 (155) ELT 204 (T) 3. Shriram Petroleum Industries Vs. CCE- 2010 (255) ELT 317 (T) Ld. Counsel analysed the tariff as it existed prior to 01.03.2005 and after 01.03.2005. He argued that in both the tariffs to qualify as 'motor spirit', the product has to have a flash point below 25°C and should be capable of use as fuel in the spark ignition engine either by itself of by admixture with any other substance. 3. Ld. AR relies on the impugned order. He argued that the appellants have themselves described the product as 'Naptha' which prior to 01.03.2005 was specifically covered under 2710.14. He argued that the impugned order clearly points out that the product is tested and answers to the test prescribed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 27.10 defines Motor spirits as follows: "Motor spirit that is to say, any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25oC, and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines." Supplementary Note (a) to Chapter 27 defines "Special Boiling point spirit" as follows: "Special Boiling Point Spirits (Tariff items 2710 11 11, 2710 11 12, 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 69oC between the temperatures at with5% and 90% by volume (including losses) distill;" 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% of more by volume (including losses) distil at 210oC (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 SP1 TOP, SP 2, TOP, SP 3 BOTTOM, STAB, NAP) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table for use as fuel in spark ignition engines:' Similarly to fall under the heading 2710 1112 to 2710 1119 (after 1.3.2005) the product also needs to answer to the definition of „motor spirit‟. Chapter heading 27.10 defines Motor Spirit as follows: "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". 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 1112 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 des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em 68 of the old Tariff. The above clarification further makes it clear that condensate is petroleum in natural state and is crude oil. It is to be classified as crude mineral oil. If that be so, it would directly come under sub-heading 2709.00 which takes in petroleum oils and oils obtained from bituminous materials and crude. When we examine the Heading 2710 we find that the main heading makes a specific exclusion of crude. If that be so, there is no merit in the contention that because of an exclusion clause provided under Motor Spirit, condensate has to undergo a test of flash point and use as a fuel in spark ignition engine for being excluded from the Heading 2710. Since the main heading itself excludes crude, it cannot be taken that a subsequent exclusion will bring it back under Heading 2710. There is also merit in the contention of the appellant that reference to admixture with any other substance is to be taken as substance other than mineral oil. The description under the heading 'Motor Spirit‟ tallies with the description under Item 6 in the old Tariff." From the above decision it is apparent that for a product to fall under the heading 2710.14, (prior to 1.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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