Classification of goods as 'Motor Spirit' under Heading 2710.13 requires the product to be a hydrocarbon oil with a flash point below 25°C that is also technically and commercially suitable for use as fuel in spark ignition engines, either by itself or in admixture.

SATENDRA VIKRAM SINGH

1. M/s. Rishi Petro Chem Pvt. Ltd., Sanand (Appellant) are engaged in the manufacture of petroleum products and availing the benefit of SSI exemption. The appellant filed a classification dated 13.05.1999 declaration under erstwhile Rule 173B of the Central Excise Rules, 1944 classifying their products Rishisol S-1, Rishisol S-2 and Rishisol S-3 under Chapter Sub Heading 2710.13 and Rishisol B-1 under Chapter Sub Heading 2710.90 of the Central Excise Tariff Act, 1985. Prior to 13.05.1999, they were classifying all the above four products under CTH 3814.00 as Industrial Solvents. Since, change of classification 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 notices were issued to the appellant dated 05.07.1999, 24.11.1999 & 19.04.2000 covering the period from 01.12.1998 to 12.05.1999, 13.05.1999 to September, 1999 and October 1999 to March, 2000 proposing classification of these four products under CTH 2710.13 and demanding the differential duty of Rs. 64,56,997/- under Section 11A along with interest under Section 11A B and penalty under Rule 173Q of the Central Excise Rules, 1944.

1.2 The show cause notices were initially adjudicated by the Assistant Commissioner vide order dated 30.11.2000, wherein the Adjudicating Authority classified the said four productions under CTH 2710.90 and dropped the demand. Against this order, revenue filed four appeals before the Commissioner (Appeals) who vide order dated 06.03.2003, set aside the Order-in-Original and allowed appeal of the Revenue.

1.3 Aggrieved with this order, the appellant filed appeal before CESTAT which vide Final Order No. A/1847/WZB/Ahd/07 dated 12.07.2007 set aside the impugned order dated 06.03.2003 with finding that the classification dispute is required to be adjudged afresh and accordingly, remanded the matter to the original Adjudicating Authority for De novo decision, in the light of the decisions mentioned in the said order of the Tribunal namely, Jagdamba Petroleum P. Ltd. Vs. Commissioner , reported at 2004 (163) E.L.T. 88 (Tri. - Del.) which stands confirmed by the Hon’ble Supreme Court when the appeal filed by the revenue was rejected as reported in (212) ELT page A-112 and Schenectady Herdillia Ltd. Vs. C.C.E., Raigad reported at 2007 (208) ELT 528 (Tri.-Mumbai)

1.4 In De novo proceedings, the Adjudicating Authority decided the matter vide order dated 19.01.2009 wherein, he classified the said products under CTH 2710.13 and confirmed the demand against the appellant. Besides confirming interest, he also imposed a penalty of Rs.5,0