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TMI Blog2010 (5) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... vide impugned Order No. 431/97-Cus., dated 4-8-97 remanded the matter back to the Commissioner (Appeals). Thereafter, the Commissioner (Appeals) passed the impugned order against which OPL is in appeal. Commissioner (Appeals)'s conclusions are as under : "(i) Driploene-C :- The respondent's contention that Driploene-C is classifiable under Heading 2707.90 rather than under heading 2713.90 is without any basis inasmuch as no material in support of the said contention has been brought on record. Their contention that Driploene-C is entitled to the benefit of Notification No. 75/84 dt. 1-3-84 is devoid of merits. In the appeal memorandum, it is contended that the classification is to be done as per the weight which exceeds more than 50% of the compounds used in the manufacture of this product. Benzene and Toluene are two aromatics used and they are exceeding 50% of the total contents and hence the product is to be classifiable under CSH 2707.90 and not under 2713.90. Therefore, the exemption claim under Notification No. 75/84, dated 1-3-84 is not available. I thus agree with the department's pleading that the said product is classifiable under CSH 2707.90 and exemption sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/OP/92 14-5-92 26,66,534.21 (vi) C.Ex./SCN/R-IV/2/OP/92 7-8-92 25,37,940.65 (vii) C.Ex./SCN/R-IV/2/OP/92 28-12-92 24,47,077.00 (viii) C.Ex./SCN/R-IV/1/OP/92 12-4-93 20,40,281.00 -------------------------------------- Total 1,97,17,015.25 -------------------------------------- All these show cause notices covered the period from Sept. 90 to Dec. 92. The first show cause notice was issued on 26-3-91 and the last show cause notice was issued on 12-4-93. Therefore, the show cause notices were issued for a period covering around 27 months i.e. the period of more than two years. All these show cause notices were identically worded. In this case, both the lower authorities upheld the classification of Benzene and Toluene under CETH 2707.10 and 2707.20 respectively, relying upon the judgment of the Tribunal in appellant's own case as reported in 2000 (126) E.L.T. 1232 (T), which was upheld by Hon'ble Supreme Court also. Consequently, the demand was also upheld. 4. The departmental appeal No. E/2380/06-Mum is against the OIA No. AT/25/M-II/2006, dt. 31-3-06. The proceedings in this case are the result of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dro Carbons (a) BTX and (b) BUR. Even though the Commissioner (Appeals) upheld the contention of the department that classification list was approved without sending the samples to laboratory to arrive at correct classification of the product, no further action has been taken by the department in this regard. 7.1.1 Even though the learned advocate submitted that the Commissioner's order had no sanctity and cannot be sustained since the appellants cannot be punished for approval of classification list without drawal of sample. In fact, proper course of action with regard to the classification of these two products was to direct the Assistant Commissioner concerned to draw samples and thereafter revised classification of these two products separately after giving an opportunity to the appellant and providing them the copy of the test report. Needless to say that the Commissioner (Appeals) cannot be found fault with for his observations that the department's contention that the approval of classification list without conducting the test was wrong. In the absence of any remedial action either prior to order of the Commissioner (Appeals) or subsequently and fresh initiation of qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these two products in the present proceedings. A perusal of the Review Order of the Commissioner in respect of classification list No. 1/89-90 would show that the only ground on which the classification was sought to be revised was that the sample of these products were drawn and sent for chemical test and its results as communicated by Dy. Chief Chemist indicated that both Benzene and Toluene are classifiable under Heading 2707.10 and 2707.20 respectively since both products fulfilled the criteria discussed above. 7.2.3 Learned advocate contended that it was the legal obligation on the part of the revenue to have proved that the Benzene and Toluene which the appellants had manufactured had a purity of less than 96%. No such evidence was brought on record by them to prove this stand. They merely relied upon the samples which were drawn by them on 4-10-90 and the test results were communicated to the appellants on 29-1-91. These tests were, therefore, conducted after the approval of the classification list as the samples were admittedly drawn on 4-10-90 whereas the classification list which was the subject matter of review before the Commissioner (Appeals) was approved on 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of law. 7.2.5 From the submissions, the main grounds are that the test report should not have been relied upon to revise classification list already approved. It is well settled law that classification can be revised by the department on the basis of fresh facts. Unlike the case of Cyclo Hydro Carbons, in this case, after the approval of classification list, samples were drawn and sent for test. It is to be noted that in 1991 itself, the Commissioner had remanded the matter to the original adjudicating authority. This order was not accepted by the appellant who came up in appeal before Tribunal and the Tribunal remanded the matter back to the Commissioner. By the time, the Commissioner (Appeals) passed the order, the test report was available on record. If the arguments advanced by the learned advocate are accepted, what would have in reality happened is only that the matter would have to be remanded by the Commissioner (Appeals) to draw fresh samples and decide the matter. However, on 26-3-91, the department issued first show cause notice which observed that Benzene and Toluene should have been classified under CETH 2707.10 and 2707.20 respectively based on the chemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both Ethylene and Propylene. The appellants had paid full duty @ 15% basic and 5% special duty in respect of these two products as would be revealed by going through the last S. No. of the classification list in 1989. Though they had claimed the benefit of other exemption notifications such as 217/86 and 177/87 in respect of these products but nowhere the benefit of said exemption notification was ever claimed by them in the said classification list. Secondly, this was not even the ground in the review the order passed by the Commissioner. Thirdly, this notification was not even in existence in the year 1989-90 as the same was rescinded vide Notification No. 105/89-C.E. Notification No. 276/67 is mentioned at Sr. No. 1 of this notification. Therefore, when the appellants had filed classification list No. 1/89-90 on 3-11-89, Notification No. 276/67 already stood rescinded on 1-3-89. Hence, there is no question of claiming the benefit of this exemption notification and there was no question on the part of the Commissioner (Appeals) in denying the appellants the benefit of the said Notification. 7.3.2 In view of the fact that there is no revenue implication at all and conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence." Toluene : Sample is in the form of colourless liquid. The product does not distill 1% to 96% by volume within 2°C range. Benzene : Sample is in the form of colourless liquid. The product does not distill 1% to 96% within 2°C range. In view of above, the products are appropriately classifiable under CETH 2707. 8.3 We have seen the letter written in reply to the department by the advocate for OPL. In all the letters, it was mentioned that the test reports were not communicated. Obviously, what the advocate meant was a copy of the chemical examiner's report must have been sent to him. No claim has been made in any of the letter that the department's communication is not factual and OPL want a copy of chemical examiner's report and communication of the test result by the Supdtt. is not enough. Appellant's advocate was requesting for communication of the test report whereas the departmental officers felt that by intimating the results of the chemical test, they had fulfilled the obligations cast on them to communicate result of the test. Learned advocate very strongly contended that because of this, the assessee was deprived of his right to contest the test report and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Rs.13,473.25 on the cartons cleared, during the period. Feb.85 to Mar.85 on the grounds that the cartons in question being made of Grey Board instead of Mill Board were not eligible for exemption under Notification No. 279/82 dt. 22-11-82. Vide their reply dt. 8-7-85, the appellants contested the demand on the grounds that the test report dt. 11-9-84 on the basis of which the notice was issued was not furnished to them. However, in his order dt. 8-4-86, the Assistant Collector observed that the relevant test report though not furnished to the appellants was reproduced in the show cause notice and confirmed the demand. The appeal preferred by the appellants against the order passed by the Assistant Collector was also rejected by the Collector (Appeals) on the following grounds :- "The Deputy Chief Chemist's report dt. 11-9-84 of the samples drawn on 24-4-82 and the earlier report on the basis of which the earlier demand upto Jan. 85 confirmed, revealed that same was Grey Board." He also held that the request by the appellant for a copy of the relevant Test Report at the time of personal hearing was beyond the period of 90 days stipulated in Rule 56(4)." From the facts as rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting that in that case, the test report was part of the proceedings and in this case, it was not. The show cause notice clearly states that from the chemical test conducted with the help of Dy. Chief Chemist and goes on to say that the products are classifiable under CETH 27. This show cause notice was issued on 26-3-91 and admittedly in reply to this show cause notice, the appellants had mentioned that notice was referring to a test report of Dy. Chief Chemist and copy of the same has not been supplied. This apparently would mean that the test report indeed formed a part of proceedings in view of the fact that it was mentioned in the show cause notice and referring to by OPL and gist of the same was received by OPL and OPL never asked for re-test. 8.6 Next point that has to be considered by us is whether the contention of the appellant that even assuming that purity of Benzene and Toluene was less than 96% on account of test report on the samples drawn on 4-10-90, the test result could not have been applied for all the clearances effected subsequent to that date. It was submitted that the appellants had upgraded their manufacturing process and thereby had achieved more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise officer cannot base the test results on the samples of the entire quantity of yarn manufactured during the period for levying higher rate of duty. In this case, such a claim was made only in 2001 at the time of personal hearing before original adjudicating authority. Further, no re-test was asked for even though it is the claim of OPL that they had upgraded the facility in 1990 itself. If they had upgraded the facility, the question arises why OPL did not question the correctness of test. OPL knew the result of the test but till 2001, OPL's own lab reports were not produced nor request for re-test was made. It cannot also be said that OPL was not aware of law since it was the consultant of OPL who wrote the letters. It is difficult to imagine that a company of the size of OPL did not know that even gist of result communicated is sufficient to ask for re-test. Tribunal in the case of Shree Vrajesh Textile Mills v. Collr. of C.E. Ahmedabad as reported in 1998 (103) E.L.T. 80 (Tribunal) held that test results of the samples drawn on 18-5-83 to 29-8-83 would be applicable to all the lots in May to June and August to Sept. 1983 when no further samples were drawn. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 of Central Excise Rules, 1944. Therefore, the failure to follow the procedure is on the part of OPL and not on the part of the department. 8.9 We also find that reliance of learned advocate on various decisions in support of his contention regarding test report are not acceptable not only in view of the decisions cited by the learned SDR but also in view of our observations. In the case of Duke & Sons Ltd. as reported in 2000 (126) E.L.T. 574 (Bom.), Hon'ble High Court of Mumbai held that full report and the worksheets should have been given to the appellant and therefore the principles of natural justice violated. In that case, the issue was whether beverages contained blended flavouring concentrate or not. In that case, it was very relevant to find out the process followed by the chemical examiner since the issue as to whether the contents can be found or not was disputed. We do not find this decision applicable to the facts of the present case. In the case of Soorajmull Nagarmull as reported in 2000 (125) E.L.T. 328 (Cal.), it was held that withholding a copy of the test report which did not support the case of the department and would have supported the case of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is decision contains only an observation in passing and is not the ratio which can be applied. Decisions discussed by us earlier are of higher judicial forum. Appeal No. E-2380/06-Mum : 9. As per the direction of this Tribunal remanding the matter to the Commissioner (Appeals), the Commissioner (Appeals) was to give copies of the Classification list and RT-12 returns for the period in dispute and also consider whether the assessment was provisional during the period. 9.1 The first question to be decided is whether the assessment is provisional during the period or not. 9.1.1 If the assessment was not provisional, the demand for the whole period gets time barred and therefore the order of the Commissioner (Appeals) will have to be upheld. The Commissioner (Appeals) has held that the assessment was not provisional in view of the fact that the classification list w.e.f. 3-11-89 was finally approved by the Assistant Collector on 26-4-90 after the matter was remanded by the Collector (Appeals) on 29-9-91, provisional assessment was ordered in respect of classification lists filed in 1991 to 1995. OPL was directed to execute a bond for differential duty. No bond was execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Therefore, the RT-12 returns were obviously assessed provisionally. Further, it is also noticed that while assessing the RT-12 returns provisionally, the assessing officer has clearly indicated differential duty payable. Such details are available only in respect of Jan. 93 and Feb. 93. After 1-3-93, as observed by Commissioner (Appeals), there is no differential duty liability in respect of Benzene and Toluene. Further, provisional assessment endorsements speak of assessment being provisional only in respect of Benzene and Toluene. No differential duty has been indicated in respect of other products in any of the assessment endorsements produced before us. In view of the fact that the provisional assessment memorandum was available upto Feb. 94 and thereafter clearly there was no provisional assessment memorandum, it has to be held that upto Feb. 94 assessment was definitely provisional. Further, the Commissioner (Appeals) also elaborately discussed product-wise duty liability and fact of change in classification or eligibility for exemption. In respect of Benzene and Toluene after 1-3-93 there is no liability for differential duty which is confirmed by assessment memorandum. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of 0-41 register. As observed by Commissioner, if the 0-41 register does not show breakup item-wise, the whole basis for demand disappears. 9.8 No detailed arguments were presented on the documents supplied by Jt. CDR which were presented on the occasion of earlier hearing. Learned advocate also did not make any submissions on these documents. Obviously, all these copies of RT 12 returns were not made available to Commissioner (Appeals). In the normal course, matter should have been remanded for verifying this aspect. But, taking into account the fact that the issue of classification and subsequent demand has been a subject matter of litigation for about 12 years now, and in view of the fact that copies of the RT 12 returns have been submitted during the course of appeal proceedings, we consider it appropriate that the matter should be finally disposed of. Accordingly, for convenience, we reproduce relevant endorsement of the Supdtt. of Central Excise in the RT-12 returns of Jan. 93 and Feb. 93. RT-12 return of Jan. 93 : Duty on the product Benzene and Toluene has been assessed provisionally under Rule 9B till the final approval of C.L. & P.L. and subject to fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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