JAGDAMBA PETROLEUM P. LTD. Vs. CCE

JUDGEMENT

(1.) THIS appeal filed by the assessee is against a common order passed by the Commissioner of Central Excise in adjudication of three show -cause notices dated 30.3.2001, 27.2.2002 and 15.11.2002. The impugned order confirmed the demands of Special Excise Duty (SED) amounting totally to over Rs. 1 crore as raised in the show -cause notices for the total period March 2000 to August, 2002. It also imposed a penalty of equal amount on the assessee under Section 11 -AC of the Central Excise Act. The learned Commissioner passed the order after holding that the products namely 'special solvent' and 'other residue', on which the above demand of SED was raised, were correctly classifiable under sub hearing 2710.13 of the Schedule to the Central Excise Tariff Act, 1985 as claimed in the show -cause notices.

(2.) EXAMINED the records and heard both the sides. The appellants are engaged in the manufacture of 'special solvent' and 'other residue' using naphtha as raw material. They classified the products under sub -headings 2710.90 and 2713.30 respectively in their classification declaration filed under Rule 173 -B of the erstwhile Central Excise Rules, 1944 as also in the monthly returns filed by them during March, 2000 to August 2002. Accordingly they cleared the products on payment of Central Excise duty at the rate of 16% addlvalorem. The Department did not accept their classification. They held the goods to be correctly classifiable under sub -heading 2710.13 and, accordingly, demanded special excise duty on them at the rate of 16% adlvalorem under the Second Schedule to the Central Excise Tariff Act. They also alleged suppression and misdeclaration of facts against the assessee and held them to be liable to penalty. The assessee, however, did not submit any reply to the show -cause notices, nor did they appear for personal hearing before the adjudicating authority. Consequently, the impugned order was passed by the Commissioner against the assessee ex parte. In the present appeal, the assessee has inter alia plea of violation of natural justice. We have scrutinized the relevant aspects and are not impressed with this plea. We would rather like to dispose of the case on its merits.

(3.) REITERATING the relevant grounds of the appeal, the learned Counsel for the appellants submitted that the impugned order was based mainly on the personal knowledge of the adjudicating authority rather than on any evidence. Even the Chemical Examiner's report, referred to in the order, was not correctly appreciated. Referring to the text of Tariff Heading 27.10, the learned Counsel submitted that it was not only the flash point bu also the use of the product by itself or in admixture with any other substance that was relevant for deciding on the question whether the product was classifiable under sub -heading 2710.13 or 2710.90. But adjudicating authority did not render any clear finding on this aspect. It held that the goods may or may not be suitable for use as fuel by itself in spark ignition engines. It was, however, also held that the admixture of the products with other substance may be suitable for use in spark ignition engines. This finding recorded by the Commissioner was not supported by any evidence whatsoever. In this context, the Counsel relied on the Tribunal's decision in Silverchem Industries Pvt Ltd and Another Vs. CCE Mumbai [ 2003 (56) RLT 702] wherein it was held that classification of the product in question under sub -heading 2710.13 was not sustainable for want of evidence to show that the product was suitable for use as fuel in spark ignition engine though in met the flash point requirement of the said sub -heading. The Counsel also challenged the penalty imposed on the appellants by the Commissioner under Section 11 -AC of the Central Excise Act. he submitted that, though the impugned order stated that the appellants had wilfully mis -stated classification of the products with intention to evade payment of duty, it did not disclose any basis for the finding. The penal action, therefore, was not sustainable.