TMI Blog2011 (2) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... not attract nil rate of duty, as none of the products covered in this heading, other than the waste oil, attract nil rate of duty and the product, in question, obviously cannot be called waste oil - this is not a case for total un-conditional waiver. The appellant, therefore, are directed to deposit an amount of Rs. 50,00,000 - Application is disposed of - E/378/2010-EX - 324/2011-EX(PB) - Dated:- 25-2-2011 - Justice R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ. REPRESENTED BY : Shri Rajesh Chhiber, Advocate, for the Appellant. Mrs. Monicka Batra, SDR, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. This is an application for waiver from the requirement of pre-deposit of duty demand of Rs. 83,74,061/- along with interest on it at the applicable rate as per the provisions of Section 11AB of the Central Excise Act, 1944, confirmed against the Appellant and penalty of equal amount imposed on the appellant, vide Order-in-Original No. 09/Comm/MP/2007 dated 30-11-2009 passed by the Commissioner of Central Excise Customs, Kanpur. 2. The appellant manufacture Organic Composite Solvent chargeable to central excise duty. The raw material for the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable opportunity of personal hearing to the appellants and taking into account the test report submitted by the appellant and, if necessary, samples already drawn can also be sent for testing. In this regard, para-5 of the Tribunal s order is reproduced below :- 5. We find that in the present case the applicants are engaged in manufacture of petroleum products and they are receiving crude oil and by the process of distillation they are extracting solvent and remaining product is cleared as residue crude oil classifying under tariff sub-heading no. 2709. Revenue wants to classify the same under sub-heading no. 2713 of the Tariff on the ground that the process undertaken by the applicants is not minor process and it cannot be said that there is no change in essential characteristics of the product in question. We find that samples drawn at the time of visit of the central excise officers were not sent for testing. On the other hand applicants produced test report dated 19-10-2006 and according to this report, product in question is crude oil. This report was not produced before the lower authorities. Further, samples drawn by revenue were not sent for testing. In these circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g No. 2709 and neither side has pointed out that the product, in question can be classified under Heading No. 2710. In view of this, the matter was fixed for re-hearing on 31-1-2011 for hearing the arguments of both the sides on the question as to whether the product, in question, would be covered by Heading No. 2710, as the same prima facie appears to be topped crude. 5. Heard both the sides. 6. Shri Rajesh Chhiber, Advocate, ld. Counsel for the appellant pleaded that the point of dispute in this case is regarding classification of the residual oil left in the kettle after distillation in the coruse of which the lighter component consisting of 30% of the total weight of the crude oil, called composite organic solvent gets separated and is cleared as composite organic solvent , that the appellant vide their letter dated 30-8-2006 had informed the concerned Asstt. Commissioner about the manufacturing process and that they would be clearing Residual Oil under sub-heading No. 2709 00 00 at nil rate of duty, that they had been submitting regularly RT-12 Returns declaring the clearance of Residual Oil at nil rate of duty under sub-heading No. 2709 00 00, that the appellant also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the goods, in question, cannot be treated as something other than the Crude Oil of Heading 2709, that the department, at no stage, has raised the issue regarding the classification of the goods, in question, under Heading No. 2710, that the department has ignored the report of IIT, Delhi which had been given by the IIT in respect of the samples sent by the appellant wherein the IIT has confirmed that product, in question, is a Crude Oil, though of different grade, that the department has heavily relied upon the statements of traders/buyers, who were not expert to give opinion in this matter and their statements are of no evidentiary value, that since from the very beginning, the appellant had disclosed the entire manufacturing process to the department, there was no suppression of facts and hence, no cause for imposition of penalty on the appellant under Section 11AC, that in view of the above, the appellant have a strong prima facie case and, therefore, the requirement of pre-deposit of duty demand, interest and penalty may be waived for hearing of the appeal. 7. Mrs. Monika Batra, ld. Departmental Representative, opposed the appellant s plea for waiver from the requirement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of the Central Excise Tariff Headings 2709, 2710 and 2713 would be the same as that of corresponding HSN Headings. In view of this, the HSN Explanatory Notes to these Headings cannot be ignored and the classification of the product, in question, has to be determined keeping in view the HSN Explanatory Notes. 10. Heading 2709 covers petroleum oils and oils obtained from Bituminous Minerals, Crude . As per HSN Explanatory Notes to this Heading, Crude Oils of this Heading remain classified in this heading even when they have been subjected to the following processes :- (1) Decantation (2) De-salting (3) Dehydration. (4) Stabilisation in order to normalise the vapour pressure. (5) Elimination of very light fractions with a view to returning them to the oil deposits in order to improve the drainage and maintain the pressure. (6) The addition of only those hydrocarbons previously recovered by physical methods during the course of the above-mentioned processes. (7) Any other process, provided it does not change the essential character of the product. In the present case, the Commingled Crude Oil is subjected to distillation at 200 centri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... npur relied upon by the Appellant and referred to in para 19 of the impugned order also refers to the product, in question, as topped crude oil . Since as per HSN explanatory notes, topped crude is covered by 2710, the product, in question, would be covered under Heading 2710 and if this is so, it would not attract nil rate of duty, as none of the products covered in this heading, other than the waste oil, attract nil rate of duty and the product, in question, obviously cannot be called waste oil. When Central Excise Tariff follows the HSN and Heading 2707, 2710 and 2713 of Central Excise Tariff - fully aligned with HSN Headings 2707, 2710 and 2713 respectively, the correct approach for the classification of the product, in question, would to be guided by HSN explanatory note. When as per HSN explanatory notes, topped crude i.e. the crude oil from which lighter fractions have been removed, is covered under Heading 2710, it will have to be classified under this heading, not under Heading 2709 as crude oil. Thus, the Heading 2709 appears to be ruled out and the product, in question, appears to be covered under Heading 2710. 12. Since we are of the prima facie view that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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