TaxTMI 
TaxTMI 
2005 (1) TMI 488
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....sify the 'C-4 Raffinate' cleared, as classified by the appellants, under sub-heading 2711.12 and to deny the concessional rate of duty under Sr. No. 24 of Notification No. 6/2000-C.E., dated 1-3-2000 and Sr. No. 34 of Notification No. 3/2001-C.E., dated 1-3-2000 & to demand differential duty based on the aforesaid proposal was issued to the appellants. 2.2 (a) The basic ground given in the show cause notice is that the C-4 Raffinate constitute of various butylenes which taken together range from 72 to 76% and therefore the C-4 Raffinate would merit classification under sub-heading 2711.12 in view of Rule 3(a) read with Rule 3(b) of Rules for Interpretation of the Schedule to Central Excise Tariff Act, 1985. (b) This notice also proposed to invoke the extended period of limitation on the ground that the appellants did not disclose to the department the composition of C-4 Raffinate. It was further alleged in the show cause notice that the appellants deliberately suppressed the facts of presence of predominance of butylenes in C-4 Raffinate with intent to evade payment of duty. The following documents were relied upon in the show cause notice for the purpose of the aforesai....
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.....0212 9 Propylene -do- 0.0333 10 i-Butane -do- 10.3215 11 N-Butane -do- 15.6434 12 Propadiene 0.125% Max. Trace 13 Butene-I Actual 20.1766 14 Iso-Butene 35.0% Min. 41.8663 15 t- Butene-2 Actual 7.1373 16 c- Butene-2 Actual 4.7836 17 1-3-Butadine 2.0% Max. 0.0179 18 Total Acetylene 0.35% Max. Traces 19 NMP 10 ppm Max. And as per Paragraph 5.5 of show cause notice (Tested at M/s. IPCL) is - Sr. No. Product Unit Content 1 Propane + Propylene % 0.01 2 Propadiene% % 0.01 3 Methyl Acetylene Ppm <25 4 1-3-Butadiene % Traces 5 1-2-Butadiene Ppm <25 6 Iso-Butane % 2.46 7 n-Butane % 9.24 8 Butene-1 % 32.85 9 Iso-Butene % 35.26 10 Trans-Butene-2 % 12.03 11 Cis-Butene-2 % 8.11 12 Ethyle Acetylene Ppm <25 13 Vinyl Acetylene Ppm <25 14 CSs ppm Ppm <25 15 Dinner Ppm <25 16 NMP Ppm <10 3.2 The appellants had classified C-4 Raffinate under 2711.19 as ....
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.... and easily liquefied gases." III. In Exxon USA Lubricants Encyclopedia : butylenes Butylene "Any of three isomeric flammable, gaseous hydrocarbons of the molecular structure C4H8; commonly derived from hydrocarbon cracking." (b) "Butylenes" has been defined in the Authoritative Technical Publication as under. 1. In Kirk-Othmer Encyclopedia of Chemical Technology (Volume 11) "Butylenes" "Butylenes are C4H8 mono-olefin isomers : 1-butene, cis-2-butene, trans-2-butene and isobutylene (2-methylepropene). These isomers are usually coproduced as a mixture and are commonly preferred to as the C4 fraction. These C4 fractions are usually obtained as by-products from petroleum refinery and petrochemical complexes that crack petroleum fractions and natural gas liquids." In terms of the definition of 'butylene' as given in Hawley's Condensed Chemical Dictionary, 'butylene' is one of the liquefied petroleum gases butane....
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....as a number of isomers like (a) normal butylenes (n-butylene). (b) Iso-butylenes (c) Cis-butylene. (d) Trans-butylene. Any one of these isomers taken alone or individually would be a butylene. Thus, an entity consisting of any one of these isomers alone would be called as butylene ("singular"). (b) However, if a product is a mixture of any two or more isomers of butylenes, then such a product would be called as butylenes ("plural'"). Such a product containing mixture of isomers of butylenes would not be called butylenes ("singular"). (c) In the various sub-headings under Heading 27.11 of HSN there is a sub-heading 2711.13. In that sub-heading the term 'Butanes' is employed. In sub-heading 2711.14 singular Ethylene, Singular propylene, Singular butylene and Singular butadiene are referred. There is no reference to "plural" butylenes or "plural" propylenes in this sub-heading 2711.14 of HSN. There is a reference of the "plural" butanes in sub-heading 2711.13. This itself demonstrates that there is a clear cut distinction between "singular'' butylene and "plural" butylenes (we are not concerned with butanes in the prese....
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....ding 2711.12 covers only butylene (singular) and not butylenes (plural). Therefore, reliance placed by the Commissioner on the documents submitted by the appellants to the Chief Controller of Explosives for renaming C-4 Raffinate as LPG is wholly incorrect. (ix) The term 'butylene' is well known term found in authoritative technical books like Chemical Dictionary or any other Chemical Books. Therefore, if the department view to classify a product as butylene, is to upheld then it must be shown by the department that it is bought and sold as butylene. The impugned order fails to establish that C-4 Raffinate is butylene meeting this test, in order to classify it as butylene under sub-heading 2711.12, the burden to establish this is squarely on the department as been held by the Apex Court in various decisions. The Commissioner without appreciating that the product in question is not bought and sold as butylene proceeded to hold that the appellants have not shown that the product is bought and sold as C-4 Raffinate that finding cannot be upheld. (x) The finding of the Commissioner that butylenes predominates and therefore it is C-4 Raffinate i....
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....nbsp; & exclude - "Separate chemically defined hydrocarbon (other than methane & propane) in a para or commercially pure state (heading 29.01). (As regards such hydrocarbon with added odo ri ferrous substance, see the General Explanatory Note to Chapter 29. Part (A), fifth paragraph. For ethane, ethylene, propene, butane, butanes and butadienes, there are specific purity criteric as indicated in paragraph II, III, IV & V above)" A combined reading of the inclusion and exclusion notes would indicate that when constituent of butylenes is less than 90% in an entity under classification then it would remain classified under Heading 27.11 and when such percentage reach more than 90% they would be shifted to Chapter 29 of the Tariff read with the Chapter notes there under. Therefore, classification of a mixture, in the present proportations in this case, under 27.11 heading of the Tariff is confirmed. Proceeding for further sub-classification under sub-headings of 27.11, it is found the Tariff Heading 27.11 is divided into - Heading No. Sub-Heading No. Description of goods Rate of duty 27.11 Petroleu....
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....sp;The fact that the department of explosives have specifically reported that the characteristics/properties of C-4 Raffinate matches with the specification of liquefied petroleum gas confirming to IS 4576 : 1999 and there is no objection to re-designate the C-4 Raffinate as liquefied petroleum gas, clearly shows that the C-4 Raffinate is commercially known as liquefied petroleum gas. Hence, the impugned order of the Commissioner holding that the appellants have failed to prove at any stage that the C-4 Raffinate was used as or is liquefied petroleum gas, is incorrect. Once the product is liquefied petroleum gas, so long as it is not a natural gas, the same is covered by the exemption Notification No. 6/2000 and 3/2001. The classification of the product as to whether it would fall under sub-heading 2711.19 would not be relevant. 5.4 The Commissioner has mis-read the analysis report submitted by the appellants to Chief Controller of Explosives, Nagpur. The mixture of isomers of butylenes contained in the C-4 Raffinate was around 80%. The appellant's submissions on the difference between "butylenes" (singular) and "butylenes" (plural) does not appear to be understood by the C....
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....0, Sl. No. 24 thereof. Therefore, even if C-4 Raffinate is treated as Butylene Sl. No. 24 of Notification No. 6/2000-C.E., would be applicable, specification of butylenes in the said Sl. No. 24 is not for the purpose of its exclusion, but for the purpose of its specific enumeration and inclusion. (ii) Even if the description of goods against Sl. No. 24 of Notification No. 6/2000-C.E., is interpreted to mean that ethylene, propylene, butylenes and butadiene are also excluded, then C-4 Raffinate is not excluded since it is not exclusively a or any 'butylene' but is a mix of 'butylenes'. In view of the findings arrived in paras supra. However, since C-4 Raffinate is liquefied petroleum gas it is covered by the description of the "Liquefied Petroleum gases and other gaseous hydrocarbons" under Sl. No. 24 of the above notification, Raffinate, even if it is assumed as butylene is not excluded from coverage of Sl. No. 24 of the Notification No. 6/2000, but would stand included in the first part of the Notification as liquefied petroleum gases. (iii) The order of the Commissioner on the question o....
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....ffinate as returned by the Gujarat Petrosynthese Ltd. Therefore the percentage of composition of butylenes was known to the department. (Annexure-22) (iii) 18-2-1991 The orders of Assistant Commissioner of Central Excise holding that C-4 Raffinate would fall under 2711.19 and would be eligible for benefit of Notification No. 157/89, dated 17-7-1989 (Annexure-23). The factory of the appellants and the factory of M/s. Gujarat Petrosynthese Ltd. (GPL) are situated within the jurisdiction of the same Division and Commissioner of Vadodara. The department had initiated proceedings against GPL demanding duty on C-4 Raffinate (Return Stream) cleared during the period from November 1984 to October 1985 alleging that GPL had dispatched processed goods/residue to the appellants under the guise of Return Stream. GPL was issued with Show cause notice dated 26-10-1989. The Collector of Central Excise, Vadodara who is having jurisdiction over the factories of the appellants and GPL passed order-in-original No. 9/MP9, dated 23-1-1991 holding that C-4 Raffinate Return Stream cleared by GPL is different in composition from C-4 Raffinate which was received by GPL from the appellants. This....