TaxTMI 
TaxTMI 
2026 (5) TMI 1038
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....ification of the product under 2707 50 00 as claimed by the appellant and re-classifies the same under 2710 1219. Thus on finalization of provisional assessments in respect of 4 bills of entry differential duty of Rs.2,12,11,37,672/- is confirmed under Section 28(4) of the Customs Act, 1962 along with interest and held the goods were liable for confiscation and imposed redemption fine of Rs.100,00,00,000/-. 3. The Learned Counsel submits that the appellant is a Central Public Sector Enterprise and a subsidiary of Oil and Natural Gas Corporation Ltd. (ONGC). It is submitted that the appellant manufactures 'Reformate' at their own refinery in Mangaluru which is further used as blend stock for manufacture of 'Motor Spirit'. During the period from October 2015 to February 2017 since their process units was shut down for maintenance activities they had shortage of the product 'Reformate' hence the same was imported during the disputed period. 4. The import was undertaken vide 4 bills of entry dated 07.10.2015, 02.09.2016, 13.09.2016 and 09.02.2017 and the same was considered under CTI 2707 50 00 availing the benefit of concession rate of customs countervailing duty (CVD) and Speci....
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....whether 'Reformate' would be classifiable under Tariff Item 2707 50 00 of ICT and be subject to Basic Customs duty (BCD) @ 2.5%, Additional Customs duty (CVD) @ 14%, Customs Education Cess @ 2%, Customs SHE Cess @1% and 4% Additional Duty (Imports) as claimed by MRPL or under Tariff Item 2710 12 19 of ICT and be subject to Basic Customs duty of 5%, Additional Customs duty (CVD) @ 14%, Customs Education Cess @ 2%, Customs SHE Cess @1% and 4% Additional Duty (Imports) and Additional levy of special CVD @ Rs.15 per litre) as claimed by Revenue. 8. The Learned Counsel acknowledges the fact that the Mumbai Bench of this Tribunal vide Final order dated 15.12.2021, held in respect of imports of 'Reformate' made by Reliance Industries Ltd. [RIL], that the said product is classifiable under CTH 2707 50 00 and the appeal filed by Revenue against this Order before the Hon'ble SC was dismissed vide Order dated 19.01.2024 with the remark, "We are not inclined to interfere with the judgment and order passed by the Customs, Excise & Service Tax Appellate Tribunal." But claims that the Hon'ble Tribunal in the said Final Order based its conclusions on the observations and....
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....ender documents unlike in the case of RIL, both of which show that 100% by volume of 'Reformate distils around 205°C. Even assuming that the term 'at' can be interchangeably used with 'by' when 100% the product under import distils at around 205°C, will it continue to be distilled even 45°C thereafter. One important factor to be reckoned with is, a (+) or (-) acceptability range is generally applicable for scientific values. In this case, by whatever mathematical permutations, one cannot explain the difference of more than 36-45°C as difference between the specified limit and the observed limit of temperature. Further, in the fractional distillation process, it is a well-known fact that products of a group are distilled at a nearer range of temperatures. It is also seen that products having low boiling points are distilled earlier than that having higher boiling points. Thus, use of the term 'by' at one place in the SCN does not give the any reliance on the classification practice adopted in other countries with reference to 'Reformate'. This is not the case in the present Appeals. 11. He also submitted that in Para 54 of the F....
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....--- Other 16. The question arises whether the product is classifiable under 2707 or under 2710. The Tribunal in the case of Reliance Industries Ltd. Vs. Additional Director General (Adjudication), Mumbai, (Supra) the Tribunal while dealing with the identical set of facts held as follows: "3. Reformate is a mixture of predominantly aromatic C5-C11 hydrocarbon compounds which are obtained by a process of catalytic reforming of Heavy Naphtha, which is an intermediate product obtained in the petroleum refinery from the processing of crude petroleum oils. Heavy Naphtha comprises mainly of straight chain hydrocarbons which are predominantly non-aromatic in nature. The process of catalytic reforming is a series of complex chemical reactions which inter-alia convert many non-aromatic hydrocarbon compounds of Heavy Naphtha into aromatic hydrocarbon compounds. Consequently, Reformate becomes an aromatic rich product comprising as much as 82%-92% by weight of aromatic compounds. As against this, the weight of aromatics in heavy Naphtha is about 10%-20%. 14. The first issue that arises for consideration in this appeal is as to whether the product Reformate merits classific....
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....in the present case 65% of the product by volume distills at around 142.5ºC. 20. Learned counsel for the appellant submitted that the distillation of a product is not a flash reaction, but is a process where the inputs start distilling slowly as the temperature rises. Thus, if the requirement stipulated is that a certain percentage of the product (by volume) must distill "at" a certain temperature, it should actually mean that as the product is heated, the distillation to the required extent must happen "by" that temperature. The submission advanced, therefore, is that the expression "at 250ºC" should be read as "by 250ºC". 21. This submission advanced by the learned counsel for the appellant deserves to be accepted. What is important to notice is that the show cause notice also accepts this position since it classifies Reformate under CTH 2710 as "light oils and preparation" under Sub-Heading Note 4 to Chapter 27 alleging that 90% or more by volume of the product distills around 163ºC to 175ºC, whereas the said Note requires distillation of 90% or more of a product at 210ºC. The show cause notice, therefore, itself has read "at 210&o....
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....e and ortho-xylene from 5 percent to 2.5 percent; on methy1 alcohol and denatured ethy1 alcohol from 7.5 percent to 5 percent; and on crude naphthalene from 10 percent to 5 percent." 25. It would be clear from the aforesaid Notification that in order to encourage new investment and capacity addition in the chemicals and petrochemical sector, the Finance Minister proposed to reduce the basic customs duty on Reformate from 10% to 2.5% and this is what was actual proposed in the Notification, wherein the customs duty under CTH 2707 50 00 was notified to be 2.5%. 26. The Tax Research Unit Circular issued by the Department of Revenue also, after making reference to the budget speech delivered by the Finance Minister on 10-7-2014 and in particular to the changes in the customs and central excise law and rates of duty proposed in connection with Chapter 27 of the Customs Act, states that the basic customs duty on Reformate and other goods under Sub-Heading 2707 50 00 has been reduced from 10% to 2.5% and the earlier Notification dated 17-3-2012 has been amended to that extent shown at Serial No. 126B in the Notification dated 11-7-2014. The Annexure to the Circular reads....
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....ot elsewhere specified or included, containing by weight of 70% or more of petroleum oils, these oils being the basic constituents of the preparations', it is evident that even if it is assumed that Reformate is a preparation, still it will not be classifiable under CTH 2710 as the said Heading specifically excludes preparations which are elsewhere specified or included. It needs to be remembered that Reformate is specifically covered under CTH 2707 and at 8-digit level under CTH 2707 50 00. 36. What also needs to be noted is that Heading 2710 consists of 3 parts namely: (i) Petroleum oils and oils obtained from bituminous minerals, other than crude; (ii) 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; and (iii) waste oils. The expression 'products covered by the first part of this heading' in the Explanatory Note does not refer to or apply to all 'Primary Products' listed under categories (A), (B) and (C) but only to the first part of the Heading 2710 i.e., 'Petroleum oils and oils obtained ....
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.... Oil India Limited, the Tribunal held as follows: "There is also merit in the contention of the appellant that reference to admixture with any other substance is to be taken as substance other than mineral oil." 45. In Gail (India) Ltd., the Tribunal held as follows: "Thus, to qualify for the phrase 'suitable of use as motor spirit' the product needs to be tested in admixture with anything other than 'mineral oil'." 46. This apart, the expression 'admixture' should refer to a substance which is added in a small quantity or proportion and would not include a product which is added in large proportion. Thus, gasoline to which Reformate is added as a blend stock in a small quantity/proportion cannot be treated to be an 'admixture' so as to justify the finding that Reformate along with gasoline (as an admixture) is suitable for use as a fuel in spark ignition engines. The Impugned based on the quality control Laboratory report arrives at the following conclusions i. The reformate imported also contains other products in them other than the aromatics ii. It is 90% of the product reformate Gets....
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....f petroleum. This part of the finding recorded by the Adjudicating Authority has not been assailed by the Department' cannot be now disputed on the ground that the present proceedings did not admit the same. 19. Secondly, the finding of the Tribunal which is reproduced below is also not disputed in the present proceedings 'the conclusion drawn by the Adjudicating Authority is, therefore, not only incorrect but even otherwise, the Department cannot be permitted take a contrary stand. It follows that the expression "at 250ºC" appearing in the description of CTH 2707 50 00, should be read as "by 250ºC". The product would, therefore, merit classification under CTH 2707 50 00'. 20. In view of the above, since the Hon'ble Supreme Court has upheld the decision of the Hon'ble Tribunal in identical set of facts where identical show-cause notices were issued to all the appellants who had imported reformate during the disputed periods, reopening the issues based on the different observations of the adjudicating authority cannot be sustained. 21. The Hon'ble Supreme Court in the case of Kunhayammed Versus State of Kerala 2001 (129) E.L.T. 11 (S.C.) dated 19.07.2000 observed ....