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TMI Blog2019 (10) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... - SUPREME COURT] has held that Pitch Creosote Mixture is a pitch and not a partially distilled tar , hence it is classifiable under sub-heading 2708.11 of the Central Excise Tariff and not under Heading 27.06. Tar and Pitch are covered under separate tariff headings after 1.3.1986, Tar is classifiable under Heading 27.06 and Pitch under heading 27.08. Pitch is derived by distillation of Tar wherein the oils Light oil, Naphthalene oil, Creosote oil and other residual oils are removed. Depending on the extent of oil removed Pitch may be soft pitch or medium soft pitch or medium hard pitch or hard pitch . Once pitch is obtained, it is a completely different product from Tar . Once a product is Pitch , it is no longer Tar . Pitch can, under no circumstances, fall under the Tariff Item 27.06. SAIL, DSP has contended that they are not having pitch plant and have submitted photographs to prove this. It is also their contention that they never manufactured pitch of any type since 1987 nor had any facility to manufacture pitch. - The facts need to be verified. It is also found that no independent evidence has been disclosed in the adjudication orders to discharge the onus cast upon the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 13.04.2009 6. E/198/11 SAIL O-I-O No. 75/Commr/BOL/10 dt:23.12.2010 5,85,07,328/- 5,85,07,328/- December 2008 to June 2010 (i) 03.12.2009 for ₹ 3,50,91,65 2/- (ii) 08.09.2010 for ₹ 2,84,15,6 76/- 7. E/109/12 SAIL O-I-O No. 86/Commr/BOL/11 dt:13.12.2011 2,35,02,093/- 2,35,02,093/- July 2010 to March 2011 16.06,2011 8. E/556/2006 CCEx, Bolpur O-I-O No. 10/Commr/BOL/05 dt:29.07.2005 Nil To increase the penalty of ₹ 1 crore imposed January 1988 to June 2004 2. The issue involved in all the seven appeals filed by SAIL is the correct classification of the product Coal Tar Partially Distilled (in short, "CTPD") manufactured by SAIL in its Coke Oven and Coal Chemical Plant at its steelworks at Durgapur, West Bengal. According to SAIL, CTPD is correctly classifiable under Tariff Heading 27060090 of the Central Excise Tariff. However, by the impugned adjudication orders the Commissioner has held that the said goods are correctly classifiable under Tariff Heading 27081010 of the Central Excise Tariff and has confirmed accordingly differential duty demands as specified in the respective adjudication orders, along with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the year 1989 the Department got the sample of CTPD analysed by the Chemical Examiner, Central Excise, Customs House, 15/1, Strand Road, Kolkata. The sample was drawn from SAIL vide Test Memo No. 1/89 dated 21.04.89. The sample asked for "(7) the sample is to be tested for, whether it is tar and distilled from coal, from lignite or from peat, and other mineral tars, whether or not dehydrated or partially distilled, including re-constituted tars (Ch.2706.00)". The result of the test report also established that CTPD is not pitch in any form but has characteristics of coal tar from which light and middle oil fraction have been distilled off. (v) The Tariff description 2706.00 specifically covers CTPD as a partially distilled tar, i.e., coal tar. The subject goods "CTPD" is known in the market as CTPD. (vi) From the tariff provisions read with the relevant facts and materials on record, it is evident that CTPD is not and cannot be classified under Tariff Heading 27081010 of the Central Excise Tariff but is correctly classifiable under Tariff Heading 27060090 thereof and, hence, there was no nonpayment or short payment of any duty payable by SAIL in respect of the said goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the oil are then mixed up in blenders with the residuals in the distillation column. The resultant product is termed as Pitch Creosote Mixture or PCM. The product PCM differs with the product CTPD in oil contents. CTPD has much more oil contents than in PCM. (x) It is settled proposition of law that the burden of proof is on the taxing authorities to show that the goods in question is taxable in the manner claimed by them. Mere assertion in that regard is of no avail; there has to be material to enter appropriate finding in that regard based on materials and documents and it is for the taxing authority to lay evidence in that behalf. (i) Hindustan Ferodo Ltd. Vs. Collector of Central Excise, 1997 (89) ELT 16 (SC), paras 3 to 6 (ii) Parle Agro (P) Ltd. Vs, Commr. of Commercial Taxes, 2017 (352) ELT 113 (SC), paras 60 & 61 (iii) Sand Plast (India) Ltd. Vs. CCE, 2019 (24) GSTL 737 (T). (xi) In the instant case, even the test report of Chemical Examiner of Department clearly evidences the correctness of SAIL's classification of CTPD under Tariff Sub-heading 27060090. Without assigning any reason whatsoever, the Commissioner has chosen to remain silent and ignore the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continued to the desired point, then the residue is known as "Straight-run-Coal tar Pitch". On the other hand, if the distillation is carried to a point where the residue is harder and more infusible than desired and is thereupon fluxed to the desired consistency and fusing point, either with certain fractions of the distillates or a flux of different origin usually of little value commercially or with other Tars, then the Pitch is known as "Cutback Coal tar Pitch". High boiling coal tar distillates include creosote oil, as well as anthracene oil etc. 'Fluxing back' is nothing but blending of pitch with either creosote oil, coal tar distillation products and anthracene oil etc. the statutory wording of the Tariff Item 11(5) are such that Coal tar Pitch obtained by blending Pitch of higher consistency with either creosote oil or high boiling tar distillate would fall under its purview. Item 68 of CET is a residuary Item. Therefore, only such Coal tar Pitches, as are obtained without blending or fluxing with creosote oil or with other Coal tar distillation products (Straight-run Coal tar Pitch) during the course of their manufacture, would be covered by Item 68 of CET and those obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nonpayment or short payment of any central excise duty payable by SAIL in the instant case. Consequently, the impugned orders of the Commissioner are erroneous, untenable and unsustainable. The payment for interest made in the impugned orders and the penalties imposed upon SAIL thereunder are also, therefore, contrary to law and untenable. As such, there is also no merit in the Revenue's appeal for enhancement of penalty in case of one adjudication order. (xvii) Moreover in passing the impugned orders the Commissioner has proceeded on the self same facts and self same allegations and on the self same issue. Periodical show cause notices have been issued by the Commissioner covering respective periods all of which have resulted in the impugned adjudication orders. In such circumstances, as per law settled by the Apex Court, e.g., Nizam Sugar Factory Vs. CCE, 2006 (197) ELT 465 (SC), there can be no allegation of suppression of facts or wilful misstatement or contravention of the statutory provisions by SAIL with intent to evade payment of duty and, therefore, there can be no invocation of the extended period of limitation nor imposition of penalty under Section 11AC of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illation of "Tar" wherein the oils - Light oil, Naphthalene oil, Creosote oil and other residual oils are removed. Depending on the extent of oil removed "Pitch" may be "soft pitch" or "medium soft pitch" or "medium hard pitch" or "hard pitch". Once "pitch" is obtained, it is a completely different product from "Tar". Once a product is "Pitch", it is no longer "Tar". Pitch can, under no circumstances, fall under the Tariff Item 27.06. Partially distilled tar would be Tar which has not yet become "Pitch". Once the product becomes "Pitch", it is no longer "partially distilled tar", product and is therefore correctly classifiable under subheading 2708.11 of the Central Excise Tariff [paras 8, 9 & 10]. Pitch creosote prior to 1st March, 1986 classifiable under Tariff Item 11(5) of the erstwhile Central Excise Tariff as the said entry included both "Tar" and "Pitch" [paras 2 & 3]. 6.4 We find that the lower adjudicating authority in his discussion and findings has stated that "The said Noticee is just dragging the scenario towards classification dispute of CTPD which has already been settled by the Hon'ble Apex Court. In this regard, it is pertinent to point out on record that the Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (iv) M/s. Himadri Chemicals & Industries Ltd. dated 02.09.2008 that they manufacture Coal Tar Pitch out of CTPD purchased from SAIL, DSP. Correctness of these contentions have not been verified or dealt with in any of the impugned orders. They are required to be verified. Findings thereon have important bearing on the correct classification of the product involved herein. 6.7 It is also found that no independent evidence has been disclosed in the adjudication orders to discharge the onus cast upon the Revenue to establish the correct classification of the impugned goods, as contended by them, and is covered by the Apex Court's decision in CCE Vs. SAIL (supra). In the case of Hindustan Ferodo Ltd. Vs. CCE (supra), the Hon'ble Supreme Court has observed and held as follows: "3. It is not in dispute before us, as it cannot be, that the onus of establishing that the said rings fell within Item 22F lay upon the Revenue. The Revenue led no evidence. The onus was not discharged. Assuming therefore, that the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed. 4. It is not the function of t ..... 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