TaxTMI 
TaxTMI 
2022 (7) TMI 714
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....der Section 35F of the erstwhile Central Excise Act, 1944. The Appellant filed Writ petition under Article 226 of the Constitution of India before the Hon'ble High Court of Sikkim at Gangtok against the Order of the Tribunal, which was also dismissed. The Appellant filed appeal before the Hon'ble Supreme Court against the Order of the Hon'ble High Court. By Order dated 01.06.2021 in Special Leave to Appeal ( C ) No.(s) 551-553/2021, the Hon'ble Supreme Court restored the Appeal before the Tribunal and directed that the same shall be decided on its own merit. It appears from the said Order that the Appellant deposited an amount of Rs. 2.54 Crores. Hence, this appeal is taken up for hearing as per the direction of Hon'ble Supreme Court. 3. The Appellant also filed Appeal No. E/76500/2019 with application for condonation of delay of filing appeal, against Order-in- Original No. 09/Comm./CE/SLG/18-19 dated 30.11.2018 passed by the Commissioner of CGST & CX, Siliguri Commissionerate. It appears that the Appellant filed a Writ Petition against the impugned adjudication order before the Hon'ble High Court of Sikkim. By Order dated 09.05.2019 in W.P. (C) No. 15/2019, the Hon....
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....f Rs. 1,57,592.00 and directed recovery of re-credit of Rs. 42,088.00 and inadmissible Cenvat Credit of Rs. 44,100.00 and also imposed penalty thereon, against which the appellant filed Appeal filed Appeal No. E/75881/2017. 6. Thereafter, another Show Cause Notice dated 29.09.2017 was issued by the Commissioner, CGST, Central Excise, Siliguri proposing demand of Central Excise duty of Rs. 13,71,26,014.00 along with interest and to impose penalty on the clearance of "Sikko Sol" classifying under tariff item 27101213 of CETA, 1985 for the period from January 2016 to December 2016 on the basis of Chemical Test Report dated 13.01.2016. 7. By Order-in-Original dated 30.11.2018, the Commissioner of CGST & CX, Siliguri, confirmed the demand of Central Excise duty of Rs.39,96,769.00 along with interest and imposed penalty on clearance of Sikko Sol classifying under tariff item 27101213 of CETA, 1985 for the period from January 2016 to December 2016. By Corrigendum dated 04.03.2019 of the Order-in-Original dated 30.11.2018, the Commissioner dropped the erroneous demand of duty of Rs. 13,31,29,245.00 after re-calculation of demand in so far as the effective rate of duty was....
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.... by volume is distilled at 106°c. Thus, the product Sikko Sol would not come within the purview of Note 4 of Sub-heading Notes, then, it cannot be covered under sub-classification under tariff item 27101213 of CETA, 1985. It is further submitted that the Adjudicating authority strongly relied on the Supplementary Note (a) of Chapter 27 of CETA where it is mentioned that Special Boiling Point Spirits. (tariff Items 27101211, 27101212 and 27101213) means "Light Oils" as defined in Sub heading Note 4. It is submitted that Sub Heading Note 4 would not apply as per Test Report and therefore Supplementary Notes (a) would also not apply. He further submitted that the words "the difference of not less than 60°c between the temperatures at which 5% and 90% by volume (including losses) distill" in Supplementary Note (a) of Chapter 27 would be linked with Sub heading Note 4 which says 90% or more by volume distilled at 210°c and which is the basis for ascertaining difference of not more than 60°c between the temperatures 5% and 90% by volume distil. It is submitted that in the present case Test Report indicates 5% by volume is distilled at 54°c. The Learned Advocate also d....
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....y drew the attention of the Bench on Light Oil and Preparation. It is submitted that sub-heading No. 271012 would also cover Motor Spirit. It is mentioned in Supplementary Note (a), Motor Spirit Flash Point below 25°c, which would be in conformity with the Test Report. It is contended that "Sikko Sol" may be treated as Motor Spirit covered under tariff item 27101213. The Learned Authorised Representative drew the attention of the Bench to the relevant portion of Rules of Interpretation of Tariff. It is further contended that there is no mention in End User Certificate that "Sikko Sol" is Solvent or Thinner. The case laws as referred by the Learned Advocate would not apply in the facts and circumstances of the case. The Learned Authorised Representatives had read the relevant portion of the impugned Order in respect of time bar issue. It is further submitted that there is a shortage/excess of goods as found during the stock verification, would establish clandestine removal of goods. 13. After hearing both the sides through video conferencing and on perusal of records, we find that the Appellant is manufacturing "Sikko Sol", which is their brand name, out of ....
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.... regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) mixtures, composite goods consisting of different materials or made up of different components, ********** ********** ********** ********** ( c) when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. GENERAL EXPLANATORY NOTES 1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub- classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "--", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" Where the description of an article or group of articles is preceded by "---" or "----", the said article or group....
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....cription in the list of tariff is accompanied by a 4-digit number "heading", 6 - digit number "sub heading" and 8- digit number "tariff item" 17. The issue involved in the present appeals is as to whether Sikko Sol would be classified under tariff item 27101213 of Central Excise Tariff Act, 1985 as held by the Adjudicating authority. Both the sides referred Chapter Notes of Chapter 27 of CETA, 1985 as reproduced below :- CHAPTER 27 Mineral Fuels, Mineral Oils and Products of their distillation; Bituminous Substances, Mineral Waxes Notes : Chapter does not cover : ****** ***** ***** ***** ***** ***** **** ***** ***** ***** ***** ***** Sub-heading Notes : ****** ***** ***** ***** ***** ***** 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 210°C (ASTM D 86 method). 5. ***** ***** ***** ***** ***** Supplementary Note: In this Chapter, the following expressions have the meanings hereby ass....
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....boiling point spirit" is preceded by "----", accompanied by eight - digit number tariff item 27101213. As per third part of Note 1 of General Explanatory Notes, tariff item 27101213 shall be taken to be a sub-classification of sub-heading 271012. 19. While classifying Sikko Sol under Tariff item 27101213 the findings of the Adjudicating authority in Order-in-Original dated 06.02.2017 are as under :- "In the Chemical report, the Chemical Engineer has opined that the two samples marked O1A and 01B of Sikko Sol, being the finished product, is a Special Boiling Point Spirit. On close perusal of the report I see that the difference between the temperatures at which 5% and 90% by volume distils is less than 60°c, the actual difference being 54°c for both the samples. As per Supplementary Note (a) to Chapter 27 of the Central Excise Tariff 'Special boiling point spirits (tariff items 2710 1211, 2710 1212 and 2710 1213) means light oils, as defined in Sub-heading Note 4, and with difference of not more than 60°C between the temperatures at which 5% and 90% by volume (including losses) distill. As the report of the Chemical Examiner is in conformity with the Su....
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....oods and not to comment on the classification of goods in any manner. 23. The Adjudicating authority while classifying Sikko Sol, a Special Boiling Point Spirit under tariff item 27101213, proceeded on the basis of Supplementary Note (a) of Chapter 27. It says that "Special Boiling Point Spirits (tariff item 27101211, 27101212 and 27101213)" means: - (a) light oils, as defined in sub-heading Note 4, (b) not containing any anti knock preparations, and (c) with a difference of not more than 60 °c between the temperatures at which 5% and 90% by volume (including losses) distil; 24. Special boiling point sprits under tariff item 27101213 in Supplementary Note (a) is started with "light oils, as defined in Sub- heading Note 4". We have already observed that Sikko Sol would not satisfy the condition of Sub-heading Note 4, which provides that Light Oils and preparations are those of which 90% or more by volume (including losses) distil at 210°c (ASTM D86 method). In this case, as per chemical test report Sikko Sol 90% by volume is distilled at 106°c. So, it is not "light oils" as defined in Sub-heading Note 4. The ....
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.... Sikko Sol is "Special Boiling Point Spirit. We find that the submission of the Learned Authorised Representative is beyond the Show Cause Notice and the Adjudication Orders. In this context, the Learned Advocate of the appellant drew the attention of the Bench the words "suitable for use as fuel in Spark Ignition Engine" in Supplementary Note (a) in respect of "Motor Spirit". It is submitted by the appellant that there is no material available on record that Sikko Sol is suitable for use as fuel in Spark Ignition Engine. On the other hand, the End User Certificate as submitted by the appellant to various authorities, it is established that Sikko Sol is nothing but Solvent and/or Thinner. The expression "suitable for use" has been considered by the Tribunal in the case of Cellulose Products of India Ltd Vs. C.C.E 1996 (82) ELT 147, it has been held that actually, practically, and commercially the product is fit for use and not casual, incidental or possible use. 27. In a series of decisions by the Hon'ble Supreme Court, High Court and Tribunal, it is held that if the department intends to classify the goods under a particular heading or sub heading different as claimed by ....
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....the product under Tariff No. 27101213 cannot be sustained. 30. It is observed that on perusal of the Show Cause Notice dated 08.04.2016 we find that only one page, paragraph nos. 2.19 and 2.20 out of 25 pages, have been dealt with classification of Sikko Sol under tariff item 27101213. Similarly, the finding of the Adjudicating authority in Order-in-Original dated 06.02.2017 is only half page as mentioned above, out of 28 pages, and the remaining pages are narrating shortage /excess of raw materials and finished goods as detected on 16.04.2015 and 27.04.2015, where the excess goods were confiscated and redemption fine of Rs. 1,57,592.00 was imposed and ordered for recovery of Cenvat Credit of Rs. 86,188.00 on shortage of goods. It would show that an extensive investigation was conducted in so far as several statements were recorded including Chief Material Manager of M/s. Oil India Ltd in respect of shortage /excess of goods. But, no enquiry was done on the proposed change of classification of Sikko Sol, such as manufacturing process, marketability, chemical composition, Chapter note etc. The Hon'ble Supreme Court in the case of Commissioner of Central Excise, Delhi Vs. UN....
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.... In our considered view, such finding of the Adjudicating authority cannot be sustained. 33. The Learned Advocate submitted that the demand of duty is barred by limitation as the extended period of limitation cannot be invoked. The Adjudicating authority observed that it is a mis- classification of the final product. The wrong classification of the product in the ER-1 return cannot be the ground for invocation of extended period of limitation. The Ld. Advocate relied on the decision of Biomax Life Science Ltd (supra) where the Tribunal held as under:- "As far as the question of limitation is concerned, it is evident from the order of the adjudicating authority that the only ground on which the extended period of limitation has been invoked and upheld in this case is that the appellant has wrongly classified the products in their ER-1 returns and paid less duty. We find that in terms of Section 11A of the Central Excise Act, extended period of limitation can be invoked only in cases of fraud, collision, wilful misstatement, suppression of facts or violation of Act or Rules with an intention to evade payment of duty. Claiming wrong classification cannot be the groun....