TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 82
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.... appellant against the redemption fine of Rs. 43,41,821/-. In respect of goods held cleared by the appellant redemption fine of Rs. 38,40,076/- was imposed under section 125 of the Customs Act. A penalty of Rs. 35 lakhs was also imposed on the appellant under section 112(a) of the Customs Act. Demand of differential duty of Rs. 75,78,301/- was however dropped. 2.1. Ld. Counsel pointed out that heading 2710 19 90 and heading 2710 12 90 read as follows: Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas 2710 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 MINERALS , THESE OILS BEING THE BASIC CONSTITUENTS OF THE PREPARATIONS ; WASTE OILS - Petroleum oils and oils obtained from bituminous minerals (other than crude ) and preparations not elsewhere specified or included , containing by weight 70 % or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, ot....
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....y „White Spirits‟. The said report describe the white spirits is a wide boiling range, medium evaporating solvent widely used in the paint, ink and dry-cleaning industries. Ld. Counsel also relied on the data sheet of Shell Chemicals issued in November, 2001 relating to Low Aromatic White Spirit. The said data sheet describe Low Aromatic White Spirit as a hydrodesulphurised straight-run hydrocarbon solvent with an aromatics content, depending on the crude oil from which it is refined, of approximately 18%. Ld. Counsel argued that the heading 2710 12 90 related to fuels whereas the heading 2710 19 90 related to solvents. Ld. Counsel argued that the product imported by them is used as solvent in the market. He pointed out that even as per the data sheet, it is clear that the product is a solvent and thus, it is rightly classifiable under 2710 19 90. 2.2 Ld. Counsel pointed out that product imported by them is actually a middle distillate. For this assertion, Ld. Counsel relies on the IS standards of Petroleum Industries and terminology. The said publication describes 'middle distillate' and 'White spirits' as follows: "1.20.040 middle distillate Kerosene and gas oils ....
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....e said restriction is specifically applicable to CTH 2710 12 90, claimed by Revenue and not to 2710 19 90, claimed by the appellant. Consequently, depending on the correct classification of the product, the ITC restriction would apply to the imports. 4.2 The heading 2710 of the Customs Tariff Act reads as follows: "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 minerals, these oils being the basic constituents of the preparations; waste oils ííí- -petroleum oils and oils obtained from bituminous minerals (other than crude) and preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, other than those containing biodiesel and other than waste oils:" Sub heading note 4 to the Chapter 27 reads as follows: 4. For the purposes of sub-heading 2710 12, "light oils and preparations" are those of which 90 % or more by volume (including losses) distil at ....
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....cular compositional data on petroleum there has been five sets of fractions of petroleum. These fractions are defined by boiling points. 1. Gases (C1.-C4) 2. Naphtha (initial boiling point -210° 0) 3. Mid distillate (210° C to 345° C) 4. Vacuum gasoil(345°C-564°C) 5. Residuum The product u/r comes under the second fraction as per the reference "Kirk-Othmer Encyclopedia of Chemical Techno Zogyourth edition Volume - 4" (b) Petroleum Product Handbook, (in the appendix Standard Industrial Naptha and related materials) also describes the characteristics of Petroleum Spirits (Mineral Spirit). 1. Colour - Water white 2. Distillation- 50% distillation upto 1 77° C and final boiling point at 210° C 3. Flash Point - 38° C With reference to above it may be conduded that product u/r is part of above described mineral spirit and comes under the class of light oil as also described in Customs Tariff'. 23.1.5 I further find that a subsequent sample was drawn and the same was forwarded to the CRCL, New Delhi vide letter dated 25.05.20 18, for retesting the sample with request to clarify :- (i) Whether the sample confirms the parameter....
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....5% by volume recovered at Final Boiling Point (FBP) Iv Aromatic content 0.7810 45 Degree C 148 Degree C 170 Degree C 184 Degree C 184 Degree C 10% by volume To be reported 35 Degree C(min) 145 Degree. C To be reported To be reported 205 Degree C(max) 40% by volume(max) 4. Parameters along with result obtained and description, ffound other than Light Oil or Low Aromatic White Spirit. NO 5. Parameters to differentiate between Light Oil and Low Aromatic White Spirit." Any Solvent based on mineral hydrocarbon covered by any standard including IS: 1745-1978 (reaffirmed 2011) - Specification for petroleum Hydrocarbon Solvents, may also meet the requirement of Light Oil as per Subheading Note 4 under Chapter 27 of CTA. Therefore the question to differentiate between Light Oil and any other solvent does not arise. Sealed remnant of redrawn sample alongwith remnant in as received condition are being returned in a box separately" From the above it is apparent that the product imported by the appellant answers to specifications prescribed under sub heading note 4 and therefore, would fall under the description 'light oils and preparations' of sub headin....
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....ated 06-03-2018 (Appendix -15) are attached to show that MTO is being given HSN Code as 2710 1990. The above discussion concludes that high flash solvents, both low aromatic and high aromatic come under HSN classification 2710 1990, technically as well as in industry practice. We do not find any merit in the said opinion of Shri Dwivedi. His observations are totally at odds with the scheme of Customs Tariff and HSN, and, therefore, rejected. 4.5 The redemption fine has been imposed on the appellant. In the appeal memorandum, the appellant has argued that the confiscation under section 111(d) of Customs is untellable in law. It has been argued that even for the classification claim by the appellant is incorrect, it cannot result in confiscation of goods. Reliance has been placed on the decision of Tribunal in the case of Komal Trading Co. 2014 (301) ELT 506. In the said case the issue did not relate to ITC restriction. In the said case, the allegation was mis-declaration and consequent demand of duty. In that case, the intention of the appellant was relevant. In the instant case, sub section 111(d) of the Customs Act has been invoked. The said section 111 (d) reads as follows: ....