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2019 (9) TMI 1523 - AT - Central ExciseClassification of goods - organic composite solvent oil (OCS) - to be classified under tariff sub heading 2710 11 19 as others appearing under the main heading 271011 as light oil and preparation - HELD THAT - The issue stands squarely decided in their favour in the case of KUCHCHAL CHEMICALS LTD. VERSUS COMMISSIONER OF C. EX. LUCKNOW 2013 (9) TMI 538 - CESTAT NEW DELHI wherein the Tribunal has held that Organic Composite Solvent cannot be classified under chapter 27. Further in the instant case sole reliance has been placed by the Ld. Commissioner on the Chemical Examiner s report. As rightly pointed out by the Ld. Advocate that in the testing report it has been stated that the sample drawn from the appellant s premises is liquid containing mixture of hydrocarbons having distillation range from 35 degree to 58 degree Celsius and flash point below 25 degree Celsius. The classification adopted by the Ld. Commissioner is not in consonance with the Note no. 4 to Chapter 27 of the Tariff which states that Light Oil and Preparations are those of which 90% or more by volume (incl. losses) distilled at 210 degree Celsius whereas the Chemical Examiner has stated that the range of distillation of product is 35 degree to 58 degree Celsius which is much below 210 degree Celsius. Hence the classification under chapter 271011 cannot be adopted. The classification adopted by the Ld. Commissioner cannot be approved and hence the entire duty demand interest and penalty are set aside - Appeal allowed - decided in favor of appellant.
Issues involved:
Classification of goods under tariff sub heading 2710 11 19, imposition of central excise duty, interest, and penalty, personal penalty on the Accountant, time bar, absence of fraud or suppression, classification under Chapter 27, reliance on Chemical Examiner's report, applicability of Note no. 4 to Chapter 27 of the Tariff, previous Tribunal decisions, settlement by the Hon'ble Apex Court, imposition of personal penalty under Rule 26 of the Central Excise Rules. Detailed Analysis: The appellant, engaged in manufacturing solvent oil classified under tariff sub heading 3814 00 10, challenged the demand of central excise duty, interest, and penalty imposed by the Ld. Commissioner for the period from 11.04.2005 to 09.02.2008 and 01.04.2008 to 28.02.2013, including a personal penalty on the Accountant. The issue revolved around the classification of goods under tariff sub heading 2710 11 19 in the Show Cause Notices (SCN) and subsequent adjudication orders. The appellant argued that the classification was incorrect as per the definition in Note no. 4 to Chapter 27 of the Tariff, emphasizing the distillation range and flash point of the product, which did not align with the requirements for classification under chapter 271011. The appellant also cited previous Tribunal decisions and the Hon'ble Apex Court's ruling to support their case. The Ld. Advocate for the appellant highlighted that the Chemical Examiner's report played a crucial role in the dispute. The report described the product as a clear colorless liquid with specific characteristics, but the classification by the Ld. Commissioner did not match the criteria set out in the Tariff. The Ld. Commissioner heavily relied on this report, leading to the imposition of duty, interest, and penalty. The appellant contested the time bar, absence of fraud or suppression, and the imposition of personal penalty on the Accountant under Rule 26 of the Central Excise Rules, arguing the lack of necessary evidence for such penalties. In the detailed analysis, the Tribunal referred to a previous decision in the case of Kuchchal Chemicals Ltd., where it was held that Organic Composite Solvent cannot be classified under chapter 27. The Tribunal scrutinized the manufacturing process, emphasizing the components used and the Chemical Examiner's findings. The Tribunal concluded that the classification as motor spirit under chapter sub-heading 2710 11 13 was incorrect, as the product did not meet the specific criteria outlined in the Tariff. The Chemical Examiner's inability to confirm the product's suitability as fuel for spark ignition engines was a crucial factor in the decision. The Tribunal also mentioned the case of Jagdamba Petroleum Pvt. Ltd., where a similar issue was resolved based on the Chemical Examiner's inconclusive report. The Supreme Court upheld the Tribunal's decision, emphasizing the Revenue's burden of proof in classification disputes. Ultimately, the Tribunal set aside the duty demand, interest, and penalty, along with the personal penalty on the Accountant, based on the inconsistencies in the classification and the Chemical Examiner's report, aligning with previous Tribunal decisions and legal principles.
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