TaxTMI 
TaxTMI 
2026 (3) TMI 1148
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....tion did not appear proper, the statements of Shri Ganpatbhai Nagarbhai Patel, Director of the company was recorded by the officers on 22.06.1999 wherein, he deposed that they were manufacturing Industrial Solvents Grade S-1, S-2, S-3 and B-1, Bottom Residue, Spray Oil, White Oil, D.W.F., Mix Oil, D.O.K., Sodium Petroleum Sulphonate etc. They charged the raw material into distillation unit and heat by firing the boiler. After transferring the product S-1, S-2 & S-3, there still remains some material in the process tank known as B-1 (also known as Bottom Oil) which is transferred to the underground tank. They were selling the products S-1, S-2 & S-3 as Industrial Solvents and product B-1 as fuel. They also maintained batchwise analysis report register. 1.1 The Revenue took samples and sent to Chemical Examiner, Vadodara for analysis who vide his report opined that the samples are in the form of colourless mineral hydro carbon having flash point below 25 degree Celsius and boiling range 127 to 175 degree Celsius. Therefore, the department thought that the essential characteristics of all the grades of Industrial Solvent including B-1 grade are same. Accordingly, three show cause n....
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....side the impugned order and remanded the matter to the original Adjudicating Authority for fresh decision in terms of the directions contained in earlier order dated 13.07.2007. 1.6 In the remand proceedings, the Adjudicating Authority vide order dated 29.02.2012 confirmed classification of Rishisol S-1, Rishisol S-2 and Rishisol S-3 and Rishisol B-1 under CTH 2710.13 and confirmed the entire demand of Rs. 64,56,997/- upon the party along with interest and imposed penalty of Rs.5,00,000/- under Rule 173Q of the erstwhile Central Excise Rules, 1944. The appellant again approached the Commissioner (Appeals) by filing appeal who vide impugned order dated 02.11.2012 allowed appeal of the party with consequential relief. The revenue has filed the present appeal before this Tribunal against the order of Commissioner (Appeals). 2. In their appeal, Revenue has taken the following grounds:- * The issue to be decided is correct classification of the products Rishisol S-1, S-2, S-3 and Rishisol B-1. With effect from 13.05.1999 by classification declaration, the appellant classified their product Rishisol S-1, S-2, S-3 under CTH 2710.13 and Rishisol B-1 under CTH 2710.90. Prior ....
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....wing their appeal. 3. Learned AR argued that for classification of products under CTH 2710, following parameters are required to be fulfilled as under:- (i) the product should be Hydrocarbon oil, (ii) the product should have a flash point below 25 degree Celsius, (iii) the product by itself or in admixture with any other substance is suitable for use as fuel in spark ignition engines and (iv) It has special boiling point. 3.1 Relying on the statements dated 22.06.1999 of Shri Ganpatbhai Patel, Director of the company wherein, he had stated that they were manufacturing Industrial Solvents and all the said products are called Petroleum products, learned AR argues that essential characteristics of all the grades of Industrial Solvents including B-1 grade are same. Since, products Rishisol S-1, S-2, S3 and B-1 were all having similar chemical properties these were classifiable under CTH 2710.13 for the period prior to 13.05.1999 and they were required to pay differential duty. For the period from 13.05.1999, the product B-1merits classification under CTH 2710.13 and not under CTH 2710.90 as sought by the respondent. Relying on the report of the....
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....he last mentioned publication, it has been mentioned that the term suitable has been judicially determined to mean actually, practically and commercially fit for the use described. The reference is shown as Matton & Co. v. U.S. Cust. Ct. 297 F Supp 1404, 1406. In another judgment, Sol. Kahaner & Bro. v. US Cust. Ct. 372F. Supp 1393, 1396, it had been held that for an item to be suitable for a particular purpose within meaning of Tariff Act, the merchandise need not be chiefly used for a stated purpose but there must be evidence of more than a casual, incidental, exceptional or possible use; the use must be substantial. In another US Customs case, it was held that "Suitable for use" as used in determining classification of a product for customs purposes meant actually, practically and commercially fit for such use and not casual, incidental or possible use. Though these are not decisions connected with Central Excise Tariff, the scope of the term as held in the aforesaid judgments is a useful guide. Nearer home, on the scope of this very Item 6 of the Central Excise Tariff, there is the decision of the Allahabad High Court in Central Distillery and Chemical Works, Meerut v. Inspecto....
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.... 5.1 The department's case is that the products Rishisol S-1, S-2 & S-3 and Rishisol B-1 have flash point below 25 degree Celsius. The product Rishisol B1 is light yellow coloured mineral hydrocarbon having flash point below 25 degree Celsius and boiling range from 127 to 175 degree Celsius. As per opinion of Shri M.C. Dwivedi, Professor, IIT, Mumbai, products can be used as fuel in spark ignition engine, same are classifiable under CTH 2710.13. 5.2 We find that the Tribunal, Delhi in the case of Jagdamba Petroleum P. Ltd. (cited supra) has analysed this issue in detail. The relevant para-5 of the said decision is reproduced below:- "5. We have examined the records and the submissions. The assessee has classified 'special solvent' and 'other residue' under sub-headings 2710.90 and 2713.30 respectively, both attracting basic excise duty at the rate of 16% ad valorem and no special excise duty (SED). On the other hand, the Revenue wants both the items to be classified under sub-heading 2710.13 which attracts SED also. Heading 27.10 is extracted below :- "27.10 Petroleum oils and oils obtained from bituminous Minerals, other than crude; Preparations not elsewhere....
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.... ignition engine for the purpose of being classified under sub-heading 2710.13. There was no evidence to show that the naphtha fractions were suitable for use as fuel in spark ignition engine. The instant case is, factually, no different as there is no evidence on record to show that the goods under consideration are suitable for use as fuel either by themselves or in admixture with any other substance, in spark ignition engine. The Chemical Examiner's report is of no use insofar as this suitability condition is concerned. Hence the decision of the adjudicating authority classifying the goods under sub-heading 2710.13 is not sustainable. The impugned order does not contain anything in rebuttal of the classification claimed by the assessee, either. We, therefore, approve the classification claimed by the assessee. As we have held the substantial issue in favour of the appellants, it goes without saying that the penalty imposed on them cannot be sustained. In the result, the impugned order is set aside and the appeal is allowed." The above decision was also upheld by Hon'ble Apex Court as reported at 2007 (212) ELT A112 (SC). 5.3 Further in the case of Commissioner of Central E....
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....atisfied for classification of a product under the broad category of "Motor spirit". Then only further sub category such as 2710.11, 2710.12, 2710.13, 2710.14, 2710.15, 2710.19 and 2710.90 can be determined on the basis of chemical properties. The revenue intends to classify these products under 2710.13 as "Other special boiling point spirits (other than Benzene, Benzol, Toluene and Toluol). No doubt, in the present case, criteria (a) and (b) are fully satisfied but as far as criteria (c) is concerned, it is not satisfied as per the technical opinion given by Prof. M. C. Dwivedi of IIT, Mumbai after studying the project report, test reports, producing logbooks etc. of the products manufactured by the assessee. The main points of technical opinion given by Shri M. C. Dwivedi, Professor, Department of Chemical Engineering, Indian Institute of Technology, Bombay, is reproduced below:- (I) The products Rishisol $ 1, Rishisol S 2, Rishisol S 3 and Rishisol B/are all aromatic industrial solvents, and not motor spirit, and are not suitable for use as fuel in spark ignition engine, as specified in IS-27961995. (II) These products are manufactured by refractionation of lig....