TaxTMI 
TaxTMI 
TaxTMI 
2011 (2) TMI 647
X X X X Extracts X X X X
X X X X Extracts X X X X
....lant in the written synopsis, is Crude Petroleum Oil, obtained alongwith Natural Gas, mixed with the condensate and there is no dispute that the Commingled Crude Oil is classifiable under Heading 2709 00 00 of the Central Excise Tariff, for which tariff rate of central excise duty is nil. The Commingled Crude Oil is subjected to distillation process in the appellant's factory during the course of which, the Commingled Crude Oil is heated upto the temperature of 2000 centigrade and by the process of distillation, the lighter component constituting about 30% of the crude oil gets separated. There is no dispute about the classification of the lighter component obtained by distillation which is sold as organic composite solvent. The dispute is about the classification of the oil left in the kettle after distillation, which is called Reduced Oil or Residual Oil. According to the appellant, the Reduced/Residual Oil is classifiable as Crude Oil only under Heading no. 2709 00 00 for which the rate of duty is nil, while according to the Department, the Reduced/Residual Oil is classifiable as "other Residues of Petroleum oils or of oils obtained from bituminous minerals" under sub-heading No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f pre-deposit of duty and penalties. Matter is remanded to adjudicating authority for deciding afresh after affording reasonable opportunity of hearing to the applicants and after taking into consideration the test report submitted by the applicants. If necessary, samples already drawn, can also be sent for testing. Accordingly, stay applications are allowed and appeals are disposed of by way of remand". 3. In pursuance of the Tribunal's order, the matter was decided afresh vide order-in-original No. 5/COMM/2009 dated 30-11-2009 by which the Commissioner again held that the product, in question, is classifiable under sub-Heading No. 2713 90 00 of the Tariff and accordingly he confirmed the duty demand of Rs. 83,84,061/- against the appellant company along with interest and also imposed penalty of equal amount on the Appellant under Section 11AC. This order did not impose any penalty on Shri Mahesh Shukla, Authorised Signatory of the appellant company. It is against the above order of the Commissioner (Appeals) that the present appeal and stay application have been filed. 4. This matter had earlier been heard on 13-8-2010 and the order had been reserved. But on perusal o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... left after distillation process and got the same tested through HBTI, Kanpur and after testing both the samples, the HBTI, Kanpur vide letter dated 19-10-2006 opined that the Residual Oil is not a residue of petroleum oil or oils obtained from bituminous minerals, as residue is obtained by distillation upto 370° centigrade, without cracking of hydro carbons present in crude oils and that the sample is residual crude oil, that on 2-7-2007, the Joint Commissioner of Central Excise, Kanpur along with officers visited the appellant's factory and drew samples of Residual Oil in bottles for sending it to the Chemical Examiner for testing to ascertain the correct classification of the Residual Oil to resolve the dispute of classification, but for the reasons best known to the department, the samples were never sent for testing and the department informed vide letter dated 10-9-2007 that no testing was required, that this stand of the department is contrary to the judgment of the Hon'ble Supreme Court in the case of CCE v. Reliance Silicones Ltd. reported in 2004 (174) E.L.T. 3 (S.C.) wherein it was held that the test report of chemical examiner is of prime importance and oral evidenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... process to which the Commingled Crude Oil was subject to, cannot be called a minor process and this fact has been confirmed by the HBTI, Kanpur; (b) The use of the product, in question, is different as it is used for burning after mixing with fuel oil or mixing with coal tar; (c) Once the process to which the Commingled Crude Oil is subjected to is not a minor process, the residual oil left in the kettle will go out of the purview of the Heading No. 2709; (d) The product in question answers to the description of "topped crude oil" referred to HSN Explanatory Notes 2710 where the rate of duty is not nil, and (e) Irrespective of whether the product, in question, is classified under Heading No. 2710 or 2713, the rate of duty would not be nil. In view of the above, Mrs. Monika Batra. ld. DR pleaded that this is not a case for waiver as in any case, the classification of the product in question under Heading No. 27.09 is totally ruled out. 8. We have carefully considered the submissions from both the sides and perused the records. For deciding the question of dispensation from the requi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....haracter of the product. In the present case, the Commingled Crude Oil is subjected to distillation at 200° centrigrade and by the process of distillation, the lighter component constituting about 30% of the total weight of the crude oil is separated and is sold as composite organic solvent. This process obviously can neither be called elimination of very light fractions with a view to returning them to the oil deposits nor can it be called a minor process which does not change the essential character of the crude. Even HBTI in their communication dated 9-2-09 to the department has opined that the process undertaken by the appellant is not a minor process of the type described in Explanatory Notes to the HSN 2709, as there is vast difference between the starting materials, "Commingled Crude Oil" and the residual oil left in the kettle after distillation after obtaining "organic composite solvent". 11. We are, therefore, of the prima facie view that in view of the HBTI's report dated 9-2-09, the classification of the product, in question, under Heading No. 2709 as crude oil appears to be totally ruled out. Though the department without any chemical test seeks to classify ....