TaxTMI 
TaxTMI 
2009 (12) TMI 532
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....at authority below ignored the basic ingredients of the definition of the term 'motor spirit' as is found in clause (a) of the Supplementary Note to Chapter 27 while rejecting the claim of the appellants regarding the classification of the product under sub heading 3814 00 10 and secondly that the authority accepted the reports and opinion submitted on behalf of the Department without giving any opportunity to the appellants to test credibility thereof by cross-examining the authors of such reports and opinion in spite of specific request for grant of such opportunity to the appellants. 3. The facts in brief relevant for the decision are as under: The appellants are engaged in the manufacture of excisable goods. During the period from October'06 to September'07 while claiming the product to be Organic Composite Solvent, classified the product under Chapter sub-heading 3814 00 10 of the First Schedule of Central Excise Tariff Act, 1985. A show cause notice came to be issued requiring the appellants to explain as to why the product should not be classified under Chapter sub-heading 2710 1113 of the said Schedule of the said Act and consequently the short paid duty to the tune of Rs....
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....totally ignored the opinion of this expert, while giving undue importance to the report and opinion submitted on behalf of the respondents when one of the reports submitted by the respondents themselves disclosed need for further enquiry as regards the suitability of the product for use as fuel in spark ignition engine. He further submitted that the ground on which the Commissioner sought to distinguish the decision in the matter of Jagdamba's case was itself sufficient to reject the contention sought to be canvassed on behalf of the appellants before the lower authority. He further submitted that proper reading of report by the Indian Institute of Petroleum would disclose that the product in question is unsuitable for spark ignition engine due to its highly unstable nature and higher benzene contents and presence of higher aromatics. This fact would have been clear to the concerned authority if it had perused the opinion of Shri 'K.S. Verma submitted by the appellants. 5. On the other hand it has been submitted on behalf of the Respondent that chemical reports and the opinion expressed by Indian Institute of Petroleum clearly disclosed that higher research octane number of 96.3 a....
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....s fuel in spark ignition engine but in cases of mixture of the same product with any other substance if found suitable for such use then it would satisfy the ingredients of the term 'motor spirit' under the said chapter and reports placed before the authority clearly revealed the same. As regards the contention regarding failure on the part of the authority to give opportunity to cross-examine the experts is concerned, it is submitted that the same has been correctly dealt with by the Commissioner and request in that regard was rejected as there was no justifiable ground disclosed for cross-examination of the said experts while relying upon the judgment of the Hon'ble High Court in the case of Shyam Lal Biri Merchant v. UOI reported in 1993 (68) E.L.T. 548 (All.). 6. Perusal of the impugned order discloses that undoubtedly the Com missioner had correctly understood the points which were required to be decided in the matter. Para 16 of the impugned order clearly records the issues which were required to be decided in the matter. The issues are whether the goods manufactured by the appellants are classifiable under Chapter heading 2710 11 13 as claimed by the Department or Chapter h....
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.... spirit' in the Tariff Act, it was observed thus - "The characteristics that the 'Motor Spirit' should satisfy for being classified as "Motor Spirit" will be that it should be a Hydrocarbon oil and it should have a flash point below 27 degree C and it should have either by itself or admixture with any other substance suitable for use as fuel for internal combustion engines/in spark ignition engines. The question of interpreting the expression suitable for use as above in the old CET as well as in CETA had come up for consideration in the Tribunal decision in the case of Cellulose Products (supra). The Tribunal has held that the meaning of the expression 'suitable' and 'suitable for use' as interpreted by the Courts in judicial pronouncements as well as the definition in Black's Law Dictionary and from another text called "Words and Phrases Legally Defined" by Butter- worth it was found that the term suitable has been judicially determined to mean actually, practically and commercially fit for the use described. For an item to be suitable for a particular purpose within the meaning of Tariff Act the merchandise need not be chiefly used for stated purposes but there must be evidence....
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.... with any other substance may be suitable for use as fuel in spark ignition engine, the matter was carried in appeal before the Apex Court without any success. In fact the Apex Court dismissed the appeal holding that "In view of the fact that admittedly the report of the Chemical Examiner is inconclusive, the Revenue has not been able to discharge its onus of proof that the classification of the excisable article by the assessee was wrong". 10. Reverting to the facts of the case in hand, perusal of the Chemical Examiner's reports it discloses the following remark - "The sample is in the form of light orange coloured, clear, free flowing liquid essentially composed of mineral hydrocarbon having the following characteristics - 1. Flash point - less than 25 degree C 2. Distillation range - (52 degree - 150 degree C 3. Density (at 15 degree C) - 0.7489 gm/ml. "Market enquiry may be made for its actual use. Note - It is not possible by this laboratory to say whether the product u/r either by itself or inadmixture with any substance can be used as fuel in spark ignition engine". 11. Referring to the above report, it is sought to be argued on behalf of the appellants that the rep....
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....is thus - "The physicochemical characteristics of Organic Composite solvent (OCS) indicates that it does not conform to the specifications for motor gasoline as per IS 2796 : 2005. Due to the presence of higher aromatic and olefinic contents it has higher anti knock index of 90.5 as determined by CFR engine. The OCS is unsuitable for spark ignition engine due to its highly unstable nature and higher benzene content. It seems to be a mixture of hydrocarbons in the distillate range (29.2-143° C) of petrochemical by-products. The total aromatics and non-aromatics were found to be of 43.2 & 56.8% by wt. respectively. The OCS sample is dominated by benezene compound (41.9 Wt.%)". 13. Referring to the observation that OCS is unsuitable for spark ignition engine due to its highly unstable nature and higher benzene content and presence of aromatic, it was sought to be contented that it rules out the possibility of classifying the product as claimed by the Department. In that regard attention is drawn to the opinion submitted by the appellants. The opinion of Shri K.S. Verma who is stated to be a Consulting Engineering Possessing B.E. Chemical Engineering Degree from Punjab University in....
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.... did not disclose the reasons for cross examination and that the cross-examination is not as a matter of right to the parties, and in that regard referred to the decision of Hon'ble Allahabad High Court in the case of Shyam LaL Bin Merchant. 15. In Shyam Lal Biri Merchant's case, it was held that right to cross- examination is not an absolute right and the question whether the applicant would be entitled to cross-examination would largely depend on the facts of each case. It may be true that in the case in hand, the appellants had not disclosed the reasons for cross-examination of the experts. But at the same time, it is apparent that the learned Commissioner has based his findings in relation to the classification of the product solely on the basis of opinion and the report of the experts. Indeed the documents have been made the sole basis for adverse finding against the assessee without giving an opportunity to the assessee to test the veracity of the contents of such documents. Obviously even though assuming that the assessee had not disclosed the reasons for cross-examination in the application it was in the knowledge of the adjudicating authority that the presence of authors....