TMI Blog2002 (6) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... and Appeal No. E/2629/92-C separately. Appeal Nos. E/2238/92-C 2. M/s. Oil India Ltd., Dullajan, a Public Sector Undertaking set up an LPG plant for recovery of LPG from natural gas. The LPG plant is treated as part of mine under clause 2(j) of Section 26 of the Mines Act, 1952. Natural gas associated with crude oil, is separated from crude oil at the oil collecting stations for supply to LPG recovery plant. The natural gas as obtained from oil well broadly consists of following hydrocarbon:- Name of the product Symbol Percentage Methane C1 86.80% Ethane C2 06.50% Propane C3 03.30% Butane C4 01.58% Pentane C5 00.31% Hexane others C6+ 00.15% Other Gases Moisture 01.36% During the process of separation, lighter fractions of crude oil (C5 and C6+) present in vapour form get condensed and termed as condensate. This condensate which is in liquid form was used, up to July 1988 for the following purposes:- (a) Injected back to the reservoir for dewaxing of the well to enhance recovery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute B-2 bond and payment be made from August 1982 onwards on the quantity cleared from storage tanks. 4. Thereafter, the appellant makes a representation on 9-12-83 to the Central Board of Excise Customs seeking clarification regarding the dutiability of the condensate. This was followed by reminders in 1983 and 1984. On 11-3-86 the Board wrote a letter to the Department of Petroleum stating that the matter has been examined in consultation with the Collector and it is now reported by the jurisdictional Collector that he has already issued instructions to the field authorities for withdrawal of demands as oil condensate is eligible for exemption as mined product. In the light of this position there was no need for exemption to oil condensate. The department was, therefore, fully aware of the emergence of condensate in the appellant's LPG plant. On facts as above, which are not in dispute, the only conclusion that could be arrived at is that, there had not been any suppression of facts on the part of appellant, nor wilful mis-declaration in order to attract the larger period of limitation under the proviso to Section 11-A of the Central Excise Act. Therefore, the demand under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icals Fertilizers, (Department of Petroleum) who were consulted, have examined the matter in detail in consultation with the Oil Natural Gas Commission and Oil India Ltd., who are the producers of crude oil in the country. Based on their opinion, that Ministry have advised that Condensate is a petroleum in natural state and is crude oil. 5. Having regard to the advice tendered by the Ministry of Petroleum based on the opinion of the trade understanding, Board is of the view that Condensate is classifiable as crude mineral oil under item 68 CET. Item No. Tariff Description 6 . Motor Spirit - 'Motor Spirit, that is to say,- (i) any mineral oil (excluding crude mineral oil) which has its flash point below twenty-five degrees of Centigrade thermometer, and, which either by itself or in admixture with any other substance, is suitable for use as fuel for internal combustion engines. 68. All other goods, not elsewhere specified but excluding- Notification No. 179/85-C.E., dated 1-8-95 granting exemption to goods produced in mines reads as follows :- Exemption to goods pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit in the contention that because of an exclusion clause provided under Motor Spirit, condensate has to undergo a test of flash point and use as a fuel in spark ignition engine for being excluded from the Heading 2710. Since the main heading itself excludes crude, it cannot be taken that a subsequent exclusion will bring it back under Heading 2710. There is also merit in the contention of the appellant that reference to admixture with any other substance is to be taken as substance other than mineral oil. The description under the heading 'Motor Spirit tallies with the description under Item 6 in the old Tariff. 9. The assessee had come to this Tribunal on an earlier occasion challenging a similar order passed by Collector (Appeals) dated 29-3-90 covering the very same period. While disposing of the above appeal this Tribunal had observed as follows :- We have also perused the query raised by the Superintendent in his letter dated 11-7-88 as to whether by itself or in admixture with any other substance, the product is suitable for use as fuel in spark ignition engine, and the reply of the appellants dated 12-7-88 to this query is that it is not suitable for use as fuel alone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot challenged by the Revenue. 12. Prior to the introduction of the Central Excise Tariff Act, 1985, natural gas was classified under Tariff Item 68 of the erstwhile Central Excise Tariff in accordance with Tariff Advice No. 61/82, dated 13-10-82 issued by the Board. The natural gas produced in a mine was exempt from payment of duty under Notification No. 179/85-C.E., dated 1-8-85. With effect from 1-3-86 natural gas and other gaseous hydrocarbon were classified under Heading 27.11. Notification No. 179/85 was amended to include the new tariff headings of goods produced in mines and included under sub-heading 2711.21. The assessee took the stand that natural gas after extraction of LPG, remains natural gas and therefore, lean gas is also to be classifiable under sub-heading 2711.21 and entitled to the exemption under Notification No. 179/85. Show cause notice dated 27-5-91 was issued under proviso to Section 11A of the Central Excise Act proposing to charge duty on lean gas by classifying the same under sub-heading 2711.29 of the tariff, namely, other than natural gas . The adjudicating authority confirmed the demand under order dated 15-1-92 which is under challenge in this ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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