Custom, Excise & Service Tax Tribunal
M/S Reliance Industries Ltd vs Commissioner Of Customs (Import), ... on 29 January, 2018
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV
APPEAL NO. C/87029/13
(Arising out of Order-in-Appeal No. 244/MCH/AC/OIL UNIT/2013 dated 28.03.2012 passed by the Commissioner of Customs (Appeals), Mumbai-I.)
M/s Reliance Industries Ltd.
Appellant
Vs.
Commissioner of Customs (Import), Mumbai
Respondent
Appearance:
Shri J.C. Patel, Advocate for Appellant Shri Ahibaran, Commissioner (A.R.) for Respondent CORAM:
HONBLE SHRI RAMESH NAIR, MEMBER (JUDICIAL) HONBLE SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 29.01.2018 Date of Decision: 27.02.2018 ORDER NO. Per: Ramesh Nair:
The fact of the case is that the appellant has imported commercial propane and classified the goods under CTH 27111200, they claimed exemption from payment of CVD under Notification No. 04/2006-C.E. The case of the department is that the exemption Notification No. 04/2006-C.E. is available only to the goods Liquefied Petroleum Gases (LPG). The goods imported by the appellant is commercial propane, commercial propane is made of only propane and not a mixture of the stipulated gas. LPG is a mixture of hydrocarbon gases i.e. propane, propylene, butane, butylenes and isobutene. Accordingly the department contended that the exemption available to LPG cannot be extended to the propane imported by the appellant.
2. Shri J.C. Patel, learned Counsel appearing on behalf of the appellant at the outset submits that this issue has attained finality by this Tribunal in the case of Commissioner of Customs (Import), Mumbai Vs. Aegis Logistics Ltd. 2014 (308) ELT 135 (Tri.-Mumbai).
3. Shri Ahibaran, learned Commissioner (A.R.) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. On careful consideration of the submissions made by both sides, we find that the identical issue has been decided by this Tribunal in the case of Aegis Logistics Ltd. (supra) wherein the appellant was one of the respondent, wherein this Tribunal has passed the following order:-
8.?We have considered the rival submissions. Undisputed facts are that the goods imported were described in the bills of entry as commercial propane. There is no dispute on the said description of the goods. Similarly, there is no dispute about its coverage under Tariff item 2711 12 00. The main contention of the Revenue in the appeal filed is that the term liquefied petroleum gases (LPG) used in the Notification 6/2006 is to mean LPG which is used as fuel and is commonly understood by public in general. Thus, the Revenues contention is that the term LPG should be restricted to the LPG used as fuel in common parlance/popular meaning/commercial/trade understanding. While it may be true that a layman in general understands LPG as the gas which is used as fuel in the household. However, the same is not the understanding in the Central Excise Tariff, Central Excise Notification or the commercial understanding of the term Liquefied Petroleum Gases (LPG). If we see the old sub-heading 2711.19, the same covers petroleum gases and other gases hydrocarbons in liquefied form. These goods are nothing but gases at the ambient temperature and pressure and are of petroleum origin. However, these gases get liquefied even at the normal temperature but at certain pressure. Such goods are termed as liquefied petroleum gases. Even the Tariff entry further sub-classifies into two categories, viz. liquefied and in gaseous state. Thus, if natural gas is imported or cleared in gaseous form, then it gets classified under 2711 21, but the same goods if imported or cleared in liquefied form, then these get classified under 2711 11.
9.?The other important thing to be noted is the term petroleum gases is a generic term and covers a vide range of gases or mixture of such gases within its fold. For example, ethylene, propylene, butylene, butadiene, butane, propane are some of the petroleum gases. Each individual component such as ethylene and other gases mentioned earlier can be separated from the mixture and used for a specific purpose. For example, ethylene has large number of uses and is taken out from the mixture of petroleum gases and used in the manufacture of various items like polyethylene etc. The same is true in respect of other gases also. In fact in refinery or petrochemical complexes, a number of such gases are extracted and used for the manufacture of specified items such as polymers etc. and generally what is left out is used as a fuel. This does not mean that the petroleum gases even before extraction of individual components cannot be used as a fuel but for commercial reasons, the left out mixture of gases is generally used as fuel. In fact many of these gases can also be used individually as fuel. Even commercial propane which is the item under dispute is being used by one of the respondents, M/s. Essar Steel Ltd., as fuel and they are importing the commercial propane to be used as fuel and has used it as fuel. Other respondent, namely M/s. Reliance Industries Ltd., has imported commercial propane for manufacture of goods in their factory at Nagothane, Maharashtra. Thus, in our view, liquefied petroleum gases (LPG) is a term which is generic in nature and covers a wide range of petroleum gases which are in the liquefied form. Propane is one of such gas.
10.?We have gone through various entries in Central Excise and Customs Notifications and we observe that even these Notifications recognizes the fact that LPG in addition to fuel is also used for the manufacture of various items, for example, entry at S. No. 28 of Notification 4/2006 (which is under discussion) covers the entry as under :-
28.?Liquefied Petroleum Gases (LPG) received by the factory from the refinery intended for use in the manufacture of Propylene or Di-butyl Para Cresol (DBPC) and returned by the factory to the refinery from where such Liquefied Petroleum Gases (LPG) were received.
Explanation. - For the purposes of the exemption, the amount of Liquefied Petroleum Gases consumed in the manufacture of propylene shall be calculated by subtracting from the quantity of Liquefied Petroleum Gases received by the factory manufacturing propylene the quantity of Liquefied Petroleum Gases returned by the factory to the refinery, declared as such under Rule 20 of the Central Excise Rules, 2002, from which such Liquefied Petroleum Gases were received. It will be seen from the above entry that the Notification itself recognizes that LPG is used for manufacture of propylene or dibutyl para cresol. Thus the Tariff recognizes the fact that liquefied petroleum gases can be used for the manufacture of various items as also fuel.
11.?It is seen that earlier Notification No. 2/2006 vide entry No. 32E was prescribing lower rate of duty on liquefied petroleum gases (LPG) falling under Heading 2711.19. The said entry did not prescribe any end-use or specification for the lower rate of duty. All that was prescribed was that LPG should fall under 2711 19. After the introduction of eight-digit Tariff in the Notification 4/2006, the corresponding entry reads as liquefied petroleum gases (LPG) falling under Tariff items 2711 12 00, 2711 13 00, 2711 19 00. If we read the corresponding descriptions in the Tariff, Heading 2711 12 00 covers propane. This obviously would imply that the liquefied petroleum gases covered by Heading 2711 12 00 are chargeable to lower rate of duty and since 2711 12 00 covers propane, which is a type of liquefied petroleum gas, the rate applicable to propane will be the concessional rate i.e. 8%. Similar will be the position in respect of butane which is covered by 2711 13 00 as also by the description liquefied petroleum gases. Tariff item 2711 19 00 is a residuary item and therefore the liquefied petroleum gases which are not covered by 2711 11 00, 2711 12 00, 2711 13 00 and 2711 14 00 will get covered under the said entry. If Revenues contention is accepted, then, only the liquefied petroleum gases falling under Heading 2711 19 00 would be chargeable to 8% duty. Such an interpretation cannot be permitted for the simple reason that other two Tariff items are mentioned in the said entry and the other two Tariff items do cover liquefied petroleum gases (LPG).
12.?From the above analysis, it is clear that the term liquefied petroleum gases though not defined in the Notification but is a term used in the Tariff as also other entries in the Notification. Since the Notification does not define the scope of the said term, the scope of the term as envisaged in the Tariff will be applicable. As per our analysis, in the Tariff liquefied petroleum gases would cover propane and therefore propane would be chargeable to concessional rate of duty as per the entry in the Notification.
13.?The appellants main contention is that the term liquefied petroleum gases used in the Notification refers to the gas which is used as fuel. It may be true that in general the public understands the liquefied petroleum gases to mean LPG which is used as fuel but that is not so, as far as the Central Excise or Customs Notifications, Central Excise or Customs Tariff are concerned.
14.?We have gone through the ISI Specification relating to liquefied petroleum gases which has been quoted both by Revenue and respondents. In the said ISI Specification, in the beginning it is stated that the term applies to a mixture of certain light hydrocarbons derived from petroleum. Clause 3.1.1 further clarifies that LP gases mainly consist of one or more of the specified hydrocarbons. Propane is one of the specified hydrocarbons. Para 3.1.2 also states that a small quantity of ethane, ethylene, pentane and pentene may also be present in the liquefied petroleum gases. In clause 4, different types of LP gases are mentioned. Commercial propane is specifically mentioned as a type of LP gases. We also note that one of the respondents in the present case is actually using the commercial propane as a fuel in its factory. We do not consider it necessary to go into the various details provided by the respondents from the internet. Suffice to state that these details indicate propane as liquefied petroleum gas. Thus in our view, propane is considered as Liquefied Petroleum Gases (LPG) in trade or commercial understanding.
15.?We have gone through the various case laws mentioned by both the Revenue and the respondents. In the present case, the Tariff and Notification understanding of the term liquefied petroleum gases, is being taken/considered rather than the pure scientific or technical meaning. The Honble Supreme Court decision in the case of Indo International Industries is distinguishable. In the case of Fenoplast (P) Ltd. (supra), the Honble Supreme Court has held that if any term or expression has been defined in the enactment, then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment, the meaning of the term in commercial parlance or common parlance has to be adopted. As mentioned earlier, the term petroleum gases is used in the Tariff and has certain implications (even though it is not defined). Similar is the position in the relevant Notification. Even in the trade and commercial understanding, propane is LPG. We are therefore of the view that in such a situation the meaning of LPG so as to limit to the understanding by a layman that also as fuel will not be correct. In the case of Connaught Plaza Restaurant (supra), the dispute was relating to soft serve and whether the same should be considered as ice-cream or under Chapter 4. It is in that circumstances that the Honble Supreme Court took a view that in common parlance soft serve is understood as ice-cream and therefore directed the classification accordingly. In the present situation, the dispute is relating to commercial propane which is not an item which is generally understood in the public but is an item which is dealt with in refinery petrochemical complex and other industrial establishments and as mentioned earlier, the term is also used in the Tariff, the Notifications use the term for both as fuel or as input for manufacturing. The scope of the term in the Tariff is being taken for purpose of Notification. We do not consider it necessary to discuss number of other judgments quoted by the respondents or the appellant.
16.?We have also gone through the Ministrys letter dated 12-8-2013 submitted by the learned Commissioner (AR) during the course of the hearing. We do not find any basis of stating that LPG is produced by mixing butane and propane in such a way that it meets the specification prescribed for LPG. Even if that is so, the proper course for the Government would have been to include such specification in the Notification. It would have also been appropriate to include the end-use if the intention was to restrict the benefit of concessional rate to LPG used for fuel only. In the absence of such stipulation in the exemption Notification, the benefit of concessional rate of duty cannot be restricted to LPG used as fuel but would be applicable to all types of liquefied petroleum gases falling under Headings 2711 20 00, 2711 13 00 and 2711 19 00.
17.?We also note that the learned Advocate for the respondent is correct in stating that the goods under dispute can be used either as fuel or in the manufacturing process. If used in the manufacturing process, they are entitled to get the credit of duty paid by them. Thus, they do not gain by paying the lower rate of duty.
18.?In view of above analysis, all the four appeals are dismissed. In view of the above decision of this Tribunal, the issue is no longer res integra. Following the ratio of the aforesaid judgment, we set aside the impugned order and allow the appeal.
(Pronounced in Court on 27.02.2018) (Raju) (Ramesh Nair) Member (Technical) Member (Judicial) Sp C/87029/13 2