TMI Blog2018 (4) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... hri V. Sridharan, Senior Advocate Ms. Anjali Hirawat, Advocate for Respondent Per: Raju: This appeal has been filed by the Revenue against order of Commissioner dropping the proceeding initiated against M/s Bharat Petroleum Corporation Ltd. (BPCL) and Shri R. Ganesh, Project Manager of BPCL. 2. The respondent M/s BPCL manufactures various petroleum products from crude hydrocarbon oils or crude oils. During the period October 2000 to February 2006, one of the products manufactured by the respondent was described as Low Aromatic Naphtha (LAN). The respondent classifiable as Naphtha under subheading 2710.14 of the CETA, 1985, while Revenue sought to classified the said product under sub-heading 2710.13 as Other Special Boiling Point Spirit . Prior to 01.03.2005 the relevant headings were as follows:- Heading No. Sub-heading No. Description 27.10 Petroleum oils and oils obtained from bituminous minerals, other than crude; Preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) with nominal boiling point range 63-70 C. 2710 11 13 ---- Other special boiling point spirits (other than benzene, benzol toluene and toluol) 2710 11 19 ---- Other 2710 11 20 --- Natural gasoline liquid (NGL) 2710 11 90 --- Other Chapter heading 27.10 defines Motor Spirit as follows: Motor spirit, that is to say, any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25 C, and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines . Supplementary Note (a) to Chapter 27 defines Special Boiling Point Spirits as follows: Special Boiling Point Spirits (tariff items 2710 11 11, 2710 11 12 and 2710 11 13) means light oils, as defined in Sub-heading Note 4, not containing any anti-knock preparations, and with a difference of not more than 60oC between the temperatures at which 5% and 90% by volume (including losses) distil; Sub-heading note 4 to Chapter 27 defines light oils and preparations as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Distillation by ASTM D:86 IBP C , 41 31 35 85 43 5%v recovered @ C, 56 34 41 88 59 10%v recovered @ C, 59 35 42 89 61 20%v recovered @ C, 63 36 42 91 66 30%v recovered @ C, 68 37 43 93 70 40%v recovered @ C, 72 38 45 95 76 50%v recovered @ C, 77 39 46 97 82 60%v recovered @ C, 82 40 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 deg. C. SP 2 Top 41 deg. C. 060 deg. C. 19 deg. C. SP 3 Bottom 88 deg. C. 114 deg. C. 26 deg. C. Stab. Nap. 59 deg. C. 112 deg. C. 53 deg. C. 2.5 Learned AR further pointed out LAN is a product different from the Naphtha. He argued that Naphtha is obtained by cracking of crude oil and as boiling range of temperature from 30 C to 325 C. He argued that LAN manufactured by BPCL is a blend of specified refined streams having boiling point range of 34 C to 160 C. He argued that the product manufactured by BPCL is actually Other Special Boiling Point Spirits . 2.6 Learned AR relied on the decision of the Tribunal in the case of Saurashtra Chemicals, Porbandar Vs. Collector of Customs, Bombay 1986 (23) ELT 283 to assert that the relevant headings in the tariff have to be interpreted and applied in the light of the Section Notes and Chapter Notes which are statutory and binding like the headings themselves. Learned AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the same brought classification of motor spirits where the Other Special Boiling Point Spirits are classified. 2.9 Learned AR further pointed out that the Learned Commissioner has referred to certain notifications, namely, Notification Nos. 190/75, 75/84, 27/89 and 102/90 which exempted naphtha used in the manufacture of certain specified final products. The method as explained in the notification, for example, Notification No. 27/89 was as follows: The amount of naphtha consumed in the manufacture of the products shall be calculated by subtracting from the quantity of naphtha received by the factory manufacturing the products, the quantity of naphtha returned by the factory to the refinery.......... Learned Commissioner has accepted the contention of the assessee that the remnant naphtha, returning to the refinery after extraction of certain specified product is naphtha only. It is submitted that notification does not settle the classification of the product. Hence reference to the notification(s) is not appropriate. 2.10 In the impugned order, learned Commissioner has relied upon the Tribunal s decision in the case of Indian Petrochemicals Corpn. Vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anti-knock preparations, and with a difference of not more than 60oC between the temperatures at which 5% and 90% by volume (including losses) distil; Sub-heading note 4 to Chapter 27 defines light oils and preparations as follows: 4. For the purposes of sub-heading 2710.11, light oils and preparations are those of which 90% or more by volume (including losses) distil at 210 C (ASTM D 86 method). So far as the first issue is concerned the revenue had relied on the following test reports of the four streams which go into the LAN pool as well as sample of LAN ANALYSIS OF SAMPLES (LAN TK, SP 1 TOP, SP 2 TOP, SP3 BOTTOM, STAB. NAP.) LAN from Tank TK 521 SP I Top (RFU) SP 2 Top (NSU) SP 3 Bottom(NSU) Stab. Nap. (HCP) Date 30.05.05 31.05.05 31.05.05 31.05.05 31.05.05 Time 1430 Hrs 1300 hrs 1335 hrs 1345 hrs 1230 hrs Distillation by ASTM D:86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volume (including losses) distil at 210 C. It is seen from the data above that 90% or more distils at 51 to 114 C. Thus each of the stream independently qualify the definition of light oil which is one of the requirements to qualify as Special Boiling Point Spirits . The second requirement is that it should not contain any anti knock compound . Ld AR has argued that this has not been disputed by the respondents. The third criteria to qualify as Special Boiling Point Spirits is that the difference between temperature at which 5% and 90% by volume it distils, shall not be more than 60 degree Celsius. The following of test result shows that the test result of each stream qualifies on this criterion. LAN from Tank TK 521 SP I Top (RFU) SP 2 Top (NSU) SP 3 Bottom (NSU) Stab. Nap. (HCP) 5%v recovered @ C, 56 34 41 88 59 90%v recovered @ C, 105 51 60 114 112 Difference ..... X X X X Extracts X X X X X X X X Extracts X X X X
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