9911796707
TMI Blog2024 (12) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 dated 30.06.2014 (herein after, referred to as 'the impugned order') passed by Commissioner of Central Excise, Mumbai-II, Mumbai. 2. The miscellaneous applications being No. E/Misc./85388/2024 and No. E/Misc./85350/2024 have been filed by the Revenue seeking change in the name and address of the respondent to "Commissioner of Central Goods & Service Tax and Central Excise, Navi Mumbai" having the office of the Commissionerate at the address "16th Floor, Satra Plaza, Sector 19-D, Palm Beach Road, Vashi, Navi Mumbai-400 705", due to change in the territorial jurisdiction after introduction of GST regime and as the appellants-assessee falls in their jurisdiction. As the revised name and address of the respondent correctly reflect the revised jurisdictional departmental authorities under whose jurisdiction the appellants-assessee is functioning for the purpose of Central Excise, these miscellaneous applications are allowed. Registry is directed to carry out the necessary changes for record purpose. 3.1 Briefly stated, the facts of the case are that the appellants herein is, inter alia, engaged in the manufacture and sale of petroleum products obtained from their petroleum refinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly cracking into unwanted products such as coke and gas. One of the intermediate product from such vacuum distillation column is Vacuum Gas Oil (also known as Waxy). Such Vacuum Gas Oil is further processed in fluid catalytic cracking units. One of the product that emerges from this process is Liquified Petroleum Gas which primarily consists of Propane, Propylene (C3 hydro carbons) and Butane and Butylene (C4 hydro carbons). 3.4 The appellants were clearing the Propylene/Propene feed stock under the broad category Acyclic Hydrocarbons by classifying the said product under Central Excise Tariff Item (CETI) 2902 9090 attracting Central Excise duty at 12% adv., Since 01.03.1994, among 34 different products manufactured in their refinery, Propylene/Propene feed stock is one such product manufactured and cleared for home consumption. 3.5 On the basis of audit/investigation conducted at the Mahul refinery of the appellants, the Department had noticed that the goods declared as 'Propylene/Propene-PP feed stock' are being incorrectly classified as the propylene of less than 90% purity which are rightly classifiable under CETI 2711 1400 and attract central excise duty at 14% adv. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be levied and collected in such manner as may be prescribed, - (a) a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods (excluding goods produced or manufactured in special economic zones) specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule. ......" CENTRAL EXCISE TARIFF ACT, 1985 Duties specified in the First Schedule and the Second Schedule to be levied 2. The rates at which duties of excise shall be levied under the Central Excise Act, 1944 (1 of 1944) are specified in the First Schedule and the Second Schedule. xxx xxx xxx xxx FIRST SCHEDULE [See Section 2] GENERAL RULES FOR THE INTERPRETATION OF THIS SCHEDULE Classification of goods in this Schedule shall be go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssified under the heading which occurs last in numerical order among those which equally merit consideration. xxx xxx xxx xxx GENERAL EXPLANATORY NOTES 1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "--", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-". Where the description of an article or group of articles is preceded by "---" or "----", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or "--". ......." 5.3 From plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of excise payable on any manufactured goods, one has to make an proper assessment of the goods for its correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commissionerate, use to determine the classification and value of the goods manufactured, in terms of approval given by the Assistant/Deputy Commissioner for 'classification list/declaration' and 'price list/declaration' submitted by the assessees under Rule 173B of Central Excise Rules, 1944. However, for new items, classification is to be done on the basis of the aforesaid legal provisions including the relevant Section notes and chapter notes of the Act of 1985, Interpretative Rules of the said Act of 1985; HSN explanatory notes; Composition, properties, usage of goods etc. After introduction of Self-Assessment Procedure in 1996 the manufacturer/ producer of any goods, except cigarette, is himself required to assess the quantum of duty on the basis of the value determined by him and to determine the rate of duty as per classification of the goods under proper chapter and its suitable heading/sub-heading. 6.2 In the impugned order dated 30.06.2014, learned Commissioner had examined the issues arising from the dispute of mis-classification of the impugned goods and gave specific findings for revising the classification of the disputed goods under CETI 2711 14 00 and for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure-A to the show cause notice as Ex.5. These are test reports of the noticee's own laboratory. Therein, I find that the test reports are pertaining to product C3 (Propylene), giving composition of the product, where the percentage of propylene is shown the varying between 64% to 78.99%. There are other components in this product i.e. As per test report No. C3/1307091 dated 16.11.2013, total C2 0.05%, propylene 77.07%, propane 22.72%, Total C² 0.16%. 47. For deciding the classification, I have also carefully gone through the Chapter Notes of Chapter 27 and Chapter 29. I have also gone through the Explanatory Notes to the Harmonized Commodity Description and Coding System (HSN), Vol.1, Chapter 1-29. In the HSN, I find that at page 220, covering Chapter head 2711, it is mentioned as "They include, in particular, the following gases, whether or not liquefied:", then at Sr. No. III, of the said Chapter head, it is mentioned as "Propene (propylene) less than 90% pure (Propene not less than 90% pure falls in heading 29.01)" Lastly, under this heading, it is mentioned as follows: "The heading does not cover: (a) Separate chemically defined hydrocarbons (other than methane and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, in such cases, the burden lies on the assessee to place on record the necessary materials in support of such claim." It was further held that "The occasion to have bona fide belief can arise in case the assessee had harboured any doubt about their dutiability and thereafter on its efforts to ascertain the legal position in that regard, he was armed with necessary material to contend that there was no dutiability in respect of such product." (Emphasis supplied) 56. In the case at hand, the noticee have not placed any material record to establish their bona fide. The feeble attempt by saying that they had filed classification list 20 years ago holds no ground as discussed above. I find that the noticee have not placed any material on record to establish their bona fide so their this plea cannot be accepted. Further, their own refinery, at Kochi was manufacturing 'propylene', reportedly having 'propylene' purity of above 90% was classified under 2901 22 00. In the face of this fact, it cannot be said that they were not aware about the correct classification. 57. I further find that the assessees are now working under self assessment scheme. Under self assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranjape and Shri M. Venugopal, under rule 26 of the Central Excise Rules, 2002." 6.3 On perusal of the impugned order, it transpires that learned Commissioner had decided the classification of the disputed goods, primarily, on the basis of the purity of the propylene/propane, as reflected in the test report dated 16.11.2013 and on the basis of the description that the goods are of 'refinery grade'. Further, he had also relied upon the statements given by the persons working in the appellants' company, to come to the conclusion that the impugned goods produced and the appellants refinery plant is having purity in the range of 50% to 75%. 6.4 We have carefully perused the facts of the case, particularly the details of the test report as mentioned in the paragraph 46 of the impugned order, wherein it is stated the percentage of propylene is varying between 64% to 78.99%. We find that the said test report is for determination of the composition of the product conducted by the NABL accredited laboratory as per testing method of 'ASTM D 2163'. The relevant extract of the 'ASTM D 2163' Standard Test Method for determination of Hydrocarbons in Liquefied Petroleum (LP) Gases and Propane/P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 of the First Schedule to the Act of 1985. Further, in the impugned order, learned Commissioner at paragraph 60 has also recorded that in the classification list claimed by the appellants to have submitted to the department, they had classified the impugned goods under CETI 2902.90 and in 2005, there was change in the tariff on account of transition from 6-digit to 8-digit classification code under Central Excise Tariff w.e.f. 28.02.2005 and thus 'propylene' is classifiable under CETI 2901 2200; however the appellants neither changed the classification of the impugned product nor did pay appropriate rate of duty which had caused the present dispute. Thus, in respect of the above classification dispute, it is clear that at the Chapter level itself, there is difference of opinion among the department and the appellants. The dispute in classification therefore lies in the narrow compass of analysis of the appropriate Headings under which the impugned goods are covered as per the Central Excise Tariff and then classifying the impugned product under the corresponding Sub-heading, Tariff Item. Now, we may closely examine the scope of the contending classification for determining correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, the position is made clear that Chapter Heading 27.11 covers within its scope and ambit, mainly of Petroleum gases and other gaseous hydrocarbons. However, separate chemically defined organic compounds, other than pure methane and propane, are not covered under chapter 27 and are to be classified under chapter 29. Further, separate chemically defined organic compounds, whether or not containing impurities remain classified under Chapter 29. Moreover, it is only pure methane and propane of chapter 27 which are excluded from the scope of coverage of chapter 29 and not propene (propylene). Thus, the distinguishing factor for classification of the impugned product i.e., propylene/propene is to determine whether these are separate chemically defined compounds and further its purity, as per standards such as BIS or other laid down norms by Indian Institute of Petroleum, which is one of the constituent laboratories under the umbrella of Council of Scientific & Industrial Research (CSIR), which has facilities for testing ASTM/IP/UOP/BIS standards for analyzing and evaluating of petroleum products. 6.6 We find that the impugned order has not examined all the aforesaid aspects for arrivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I. Methane and propane, whether or not pure. II. Ethane and ethylene less than 95% pure. (Ethane and ethylene not less than 95% pure fall in heading 29.01.) III. Propene (propylene) less than 90% pure. (Propene not less than 90 % pure falls in heading 29.01.) IV. Butane containing less than 95% of n-butane and less than 95% of isobutane. (Butane containing not less than 95% of n-butane or isobutane falls in heading 29.01.) V. Butenes (butylenes) and butadienes less than 90% pure. (Butenes and butadienes not less than 90% pure fall in heading 29.01.) VI. Intermixtures of propane and butane. The above percentages are calculated by reference to volume for gaseous products and to weight for liquefied products. The heading does not cover: (a) Separate chemically defined hydrocarbons (other than methane and propane) in a pure or commercially pure state (heading 29.01). (As regards such hydrocarbons with added odoriferous substances, see the General Explanatory Note to Chapter 29, Part (A), fifth paragraph. For ethane, ethylene, propene, butane, butenes and butadienes, there are specific purity criteria as indicated in paragraphs II, III, IV and V above.) In careful read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing should be avoided where the statutory context in which the tariff entry appears requires otherwise. [Akbar Badruddin Jiwani vs. Collector of Customs 47 E.L.T 161 (SC)]. (iii) Normally, classification is to be done with reference to the specific wordings of the headings/sub-headings as mentioned in the tariff. However, where the goods in question are capable of being called by more than one name, the classification is to be done with reference to the most appropriate name and for this purpose, the basic functional/character/use would become more relevant. The functional aspect was considered by the Hon'ble Apex Court in Atul Glass Industries Ltd. vs. CCE 25 E.L.T 473 (SC): Indian Tool Manufacturers vs. CCE 74 E.L.T 12 (SC): CCE vs. Kumudam Publication (P) Ltd. 96 E.L.T 226 (SC). 8.2 We find that the learned Commissioner have not determined the classification on the basis of any such laid down general principles as above, and had solely relied upon the test report, HSN explanatory notes without due analysis of its relevance to the extent it apply to the tariff classification as per the terms of the headings and any relative Section or Chapter Notes, which have the legal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide their letter dated 04.03.2014 had informed that they are revising the classification under CETI 2711 1400 and paying the duty on the rate of 14% adv. under protest. These records clearly prove that the classification of the impugned product was initially approved by the Department under the classification adopted by the appellants, and the issue of misclassification of the impugned product was raised during the audit scrutiny by the department authorities. The periodical returns filed by the appellants before the department authorities, clearly show that all information relating to the production and clearance of the impugned products, were in the knowledge of the Department, including the classification of the product, and there was no suppression of fact or mis- statement in the declaration filed by the appellants. Further, CBIEC's instructions issued vide Circular No. 808/5/2005-CX dated 25.08.2005, clearly state that 8-digit classification code is a technical change adopted in the numbering scheme for Central Excise classification, and all possible assistance to trade industry may be provided by the Department for switching over to such new 8-digit tariff. Hence, the invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence. 9. In that view of the matter and in view of the requirements of Section 11A of the Act, the claim had to be limited for a period of six months as the Tribunal did. We are, therefore, of the opinion that the Tribunal was right in its conclusion. The appeal therefore fails and is accordingly dismissed." 9.3 In view of the above judgement delivered by the Hon'ble Supreme Court, we are of the considered view that the impugned order does not stand the scrutiny of law on the ground of limitation itself and therefore is liable to be set aside. 9.4 We further find that in exercise of the powers under Section 37B of Central Excise Act, 1044 CBEC have issued instructions to field formations for the purpose of maintaining uniformity in applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is a change in the rate of duty or tariff classification in respect of the goods manufactured by him or whenever a new item is intended to be manufactured and not contained in the declaration already filed. The correctness and completeness of the declaration should be duly certified by the assessee. 4. The Range Superintendent shall acknowledge forthwith the receipt of the declaration and return the 4th copy back to the assessee in lieu of acknowledgement. 5. The Range Superintendent shall then check the declaration with the goods being manufactured by the assessee and shall also check the previous declaration or the classification list, as the case may be, filed by the assessee. He may also study the manufacturing process and submit the original and duplicate copies of the declaration after retaining the triplicate copy with himself, to the Divisional Assistant Collectors along with his verification report within 6 (six) weeks of the receipt of the declaration from an assessee. Collector must issue the instructions that in respect of declaration filed by Non-SSI units, the Range Officer should invariably endorse on the Original and Duplicate copies thereof, a verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ____ Code No. ________ 3. Whether Amending/ Superseding declaration already filed. State ____________ Code No. ________ Manufacturer's Code No. ______________ Type of Manufacturer's Code No.__________ 1. Name and address of the assessee ________________________________ 2. Location of the factory/warehouse________________________________ 3. Central Excise Registration No. __________________________________ Manufacturer's Code No. _______________________________________ 4. Particulars of all excisable _______________________________________ goods (including wholly exempted _______________________________ produced, manufactured, warehoused) ___________________________ Sl.No. Full description of each item of the goods produced manufactured or warehoused including Brand names, if any together with the description as would appear in the invoice and specifications having a bearing on either classification or the commercial nomenclature Chapter heading No. & sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 under which each goods fall. (1) (2) (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to the determining factors and legal provisions, as discussed above in the paragraphs 6.4 to 8.2. Consequently, the confirmation of adjudged demands and imposition of penalty on the appellants, does not sustain and the same is set aside. 11. Therefore, we are of the considered view that the impugned order dated 30.06.2014 classifying imported goods under heading 2711 1400 does not stand the scrutiny of law and therefore it is not legally sustainable. In order to determine the proper classification of the impugned goods as per law, we consider it necessary that the matter should be remanded back to the original authority. Needless to state that sufficient opportunity for personal hearing should be given to the appellants and all relevant data with respect to clearance of the products during the relevant time, including test reports covering the entire clearances etc. and any other additional information that may be submitted by the appellants, shall be taken into consideration by the adjudicating authority during the de novo proceedings. 12. In the result, by setting aside the impugned order dated 30.06.2014, we allow the appeals in favour of the appellants, by way of reman ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
