Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Avani Petrochem Ltd., Shri Dakshay ... on 6 August, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT:
II
Appeal No.E/2632, 2633/2006
Arising out of OIO No.01/COMMR/VDR-II/MP/06-07, dt.26.05.06.
Passed by: Commissioner of Central Excise & Customs, Vadodara II
For approval and signature:
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. B.S.V. Murthy, Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Avani Petrochem Ltd., Shri Dakshay H. Thakkar.
Respondent:
CCE Vadodara II Represented by:
Shri J.C. Patel, Advocate for the Assessee; Shri Sameer Chitkara, SDR for the Revenue.
CORAM:
MRS. ARCHANA WADHWA, MEMBER (JUDICIAL) MR. B.S.V. MURTHY, MEMBER (TECHNICAL) Date of Hearing:06.08.09 Date of Decision:
ORDER No. /WZB/AHD/2009 Per: MR. B.S.V. Murthy:
Demand for Rs.4,66,90,279/- in respect of clearances of various petroleum hydrocarbon solvents during the period August 1998 to 24.01.2000, has been confirmed against the appellant M/s Avani Petrochemicals along with interest as applicable. Penalty of equal amount has also been imposed under Section 11AC of CEA, 1944. Penalty of Rs.10 lakhs has been imposed on Managing Director and land, buildings, Plant & Machinery have been confiscated and allowed to be redeemed on payment of fine of Rs.5 lakhs. The appellants are challenging this order, which has been issued on the ground that the petroleum hydrocarbon solvents manufactured by the appellant are classifiable under Chapter sub-heading 2710.19 of 1st Schedule to CETA, 1985 (Tariff for short).
2. Shri J.C. Patel, learned advocate on behalf of the appellants, submits that this is a second round of litigation. In first round, the matter was remanded by Tribunal requiring the Commissioner to re-examine the issue in the light of the decision of the Tribunal in case of M/s Silverchem Industries Pvt. Ltd. Vs. CCE Mumbai 2003 (155) ELT 204, holding that for a product to be classifiable as special boiling point spirit, the product has to satisfy both the criteria for motor spirit in regard to flash point as well as in regard to its suitability for use as fuel in the spark ignition engines and that satisfaction of only one criteria of flash point alone is not sufficient. However, fresh samples could not be drawn of the products manufactured by the appellant since even at the time of booking of the case against the appellant, there was absolutely no stock of final products and only some samples of final products were available and therefore no stock was at all available for test. Learned advocate submits that the Commissioner relied upon the opinion of the Chief Technical Service Manager of IOCL Vadodara (CTSM for short), vide his letter dt.23.04.2000, had clarified that from the given distillation range of the solvents, it appears that these solvents can be blended with other petroleum streams to meet specifications for motor spirit. In fact, so long as the final boiling point of a hydrocarbon mixture does not exceed 2150C, by blending that mixture with suitable petroleum streams and octane boosting agents if necessary, an admixture can be prepared which conforms to the specifications of motor spirit. The Commissioner has relied upon the assessees record and test reports of the samples of the final product available at the time of officers visit to the factory. Learned Advocate relied upon the several decisions of the Tribunal in support of his contention that unless the product is tested, to examine its suitability for use in spark ignition engine as required in the definition of motor sprit in the tariff, the product manufactured by the appellant could not have been classified and made liable to duty as held by the Commissioner. Since the appeal can be decided on this account alone, we are not going to the other grounds and arguments advanced by the learned advocate appearing on behalf of the appellant.
3. In the remand order, Tribunal had observed as under:
4. After hearing both sides and perusal of case records, we find that there is no finding by the adjudicating Commissioner that the impugned intermediate product satisfies the criterion of suitability for use to merit classification under sub-heading 2710.l3. It has earlier been held by the Tribunal in the case of M/s Silverchem Industries Pvt. Ltd. Vs. CCE Mumbai - 2003 (155) ELT 204 (Tri-Mumbai), that a product to be classifiable as special boiling point spirit under sub-heading No.2719.13 has to satisfy both the criteria for motor spirit in regard to flash point as well as suitability for use as fuel, and that satisfaction of flash point criterion alone is not sufficient. Secondly, we also find that the details of comparable products have not been made available to the appellants. Keeping in view the foregoing, we are of the opinion that the matter requires fresh consideration after furnishing details of the comparable goods to the appellants apart from testing the impugned products for its suitability for classification under sub-heading No.2710.13. As such, we set aside the impugned order and remand the case for re-adjudication by the Adjudicating Commissioner, who will grant a reasonable opportunity of hearing to the appellants. We make it clear that all issues are left open to be considered by the Adjudicating Commissioner at the time of re-adjudication.
4. We find that the directions of the Tribunal have not been carried out in view of the fact that the second requirement of suitability for use spark ignition engine has not at all been examined. The opinion of CTSM of IOCL Vadodara is also not conclusive since he himself has clarified that from the given distillation range of solvents, it appears that these solvents can be blended with other petroleum streams to meet the specifications for motor spirit. This cannot be considered as conclusive opinion. Further, Tribunal in case of M/s Indu Nissan Oxo Chemical Industries Ltd. Vs. CCE Vadodara as reported in 1998 (101) ELT 201 (Tri.), had held relying on U.S. Customs case that the term suitable for use means actually, practically and commercially fit for such use and not casually incidental or possible use. In view of the above, Commissioners reliance upon the opinion of CTSM cannot be held appropriate. In the absence of specific test report in support of the product and in view of the fact that the admittedly even at the time of visit of the officers, samples were not available facilitating the test for suitability of product for use in spark ignition engine, the Commissioners order cannot be sustained.
5. In view of the above, the demand cannot be sustained and consequently the penalties imposed upon the appellant company as well as well as Managing Director also cannot be sustained. Accordingly, the impugned order is set aside and the appeals are allowed with consequential relief to the appellants.
(Pronounced in Court on _________________________)
(Archana Wadhwa) (B.S.V. Murthy)
Member (Judicial) Member (Technical)
cbb
??
??
??
??
5