Custom, Excise & Service Tax Tribunal
M/S. Bajrang Petro Chemicals Pvt. Ltd vs Cce, Kanpur on 1 May, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI COURT II EXCISE APPEAL NO. 507 OF 2008 [Arising out of Order-in-Original No. 09/COMM/MP/2007 dated 29.11.2007 passed by the Commissioner, Central Excise, Kanpur] For approval and signature: Honble Mr. S.S. Kang, Vice President, Honble Mr. Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see the order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Departmental authorities? M/s. Bajrang Petro Chemicals Pvt. Ltd., Appellants Vs. CCE, Kanpur Respondent
Appearance:
Shri Rajesh Chhibber, Advocate for the appellants, Shri A.N. Sharma, Jt. CDR, Departmental Representative, for the respondent Coram:
Honble Mr. S.S. Kang, Vice President, Honble Mr. Rakesh Kumar, Member (Technical) Date of Hearing: 1st May, 2008 FINAL ORDER NO._________________ dated __________ Per S.S. Kang:
Heard both sides.
2. Applicants filed these applications for waiver of pre-deposit of duty of Rs. 83,71,091/- and penalties.
3. Applicants are engaged in manufacture of petroleum products. They are purchasing crude oil and by the process of distillation they are extracting solvent and clear the remaining crude oil claiming as residue crude oil classifying the same under Tariff heading 2709.000 of Tariff. Case of the Revenue is that residual crude oil or reduced crude oil is classifiable under heading 27139000 of the Central Excise Tariff as other residue of petroleum oil.
4. Contention of the applicants is that when they started their production the applicants vide letter dated 30th August, 2006 informed the Revenue regarding their manufacturing process and their claim of classification in respect of their final product as well as their residue crude oil. In spite of this letter Revenue did not respond. The applicants factory was visited and samples were obtained from the product in question. Thereafter, applicants wrote 3 letters asking for the result of the samples obtained of the product in question but the Revenue vide letter dated 10.9.2007 informed that there is no need for sending samples for testing. Therefore, applicants were directed to take samples back. Therefore, in absence of any test report it cannot be said that product in question is residual crude oil. Contention is that as per HSN Explanatory Note, Chapter Heading 2709 covers crude petroleum still be called crude as some minor process undertaken which does not change the essential charactertistics of the product. Contention is that in the present case by distillation appellants are only recovering solvent and this process is a minor process and the same does not change essential characteristics of the product. Applicants also relied upon the test report of Harcourt Butler Technological Institute, Kanpur dated 19.10.2007 whereby samples sent by the applicants were tested and the product in question was described as residue crude oil. Contention is that the Revenue has drawn samples but the same were not sent for testing and the test report submitted by the applicants was in favour of the applicants. Therefore, demand classifying the product under heading 27139000 of the Central Excise Tariff is not sustainable.
4. Contention of the Revenue is that test report dated 19.10.2007 which is now produced by the applicants, was not produced before the lower authorities, and samples were not taken in the presence of any revenue officer. Therefore, this report will not help the case of applicants for deciding the issue for classification. Contention is that as the applicants were receiving crude oil and by distillation they are extracting solvent, therefore, the process of distillation cannot be held to be minor process though it does not change essential characteristics of the product. Therefore, the product is classifiable under tariff heading 2713.9000 of the Tariff.
5. We that in the present case the applicants are engaged in manufacture of petroleum products and they are receiving crude oil and by the process of distillation they are extracting solvent and remaining product is cleared as residue crude oil classifying under tariff Sub-heading 2709. Revenue wants to classifying the same under Sub-heading 2713 of the tariff on the ground that the process undertaken by the applicants is not minor process and it cannot be said that there is no change in essential characteristics of the product in question. We find that samples drawn at the time of visit of the central excise officers were not sent for testing. On the other hand applicants produced test reported dated 19.10.2006 and according to this report product in question is crude oil. This report was not produced before the lower authorities. Further, samples drawn by revenue were not sent for testing. In these circumstances, we find that the matter requires to be re-considered by the adjudicating authority. Therefore, impugned order is set aside after waiver of pre-deposit of duty and penalties. Matter is remanded to adjudicating authority for deciding afresh after affording reasonable opportunity of hearing to the appellants and after taking into consideration the test report submitted by the applicants. If necessary, samples already drawn, can also be sent for testing. Accordingly, stay applications are allowed and appeals are disposed of by way of remand.
(Dictated & pronounced in the Open Court.) (S.S. KANG) VICE PRESIDENT (RAKESH KUMAR) MEMBER (TECHNICAL) Dated 2nd May, 2008-05-02 RK