Case Law Details
Brief facts of the case:
Indian Petrochemicals Corporation Limited (IPCL) is engaged in the manufacture of various types of petrochemicals, falling under Chapter 27 and 29 of Central Excise Tariff Act, 1985.
One of the products which is manufactured by IPCL is C4 Raffinate, for which the company is paying central excise duty @ 8 per cent availing the benefit of Notification No. 6/2000 dated 01.03.2000 against the normal rate of 16%.
The IPCL has classified the product under chapter sub-heading 2711.19.i.e Other Petroleum & gaseous hydrocarbons. As per the Department, the aforesaid product should have been classified under Chapter Heading 2711.12 as butylene. Subsequently, a show cause notice was issued demanding IPCL to pay differential 8% duty. The IPCL replied to the show cause notice sticking to its position that the as per the aforesaid exemption Notification, 50% of the duty of excise specified in the First Schedule, was payable.
The Commissioner of Central Excise (adjucating authority) unsatisfied with the plea of assessee passed an order raising the demand for 8% differential duty.
Aggrieved by the order of Commissioner, IPCL carried the matter before CESTAT.
CESTAT concurred with the view taken by the assessee and reversed the order of Commissioner.
Revenue aggrieved by the order of CESTAT approached to Hon’ble Supreme Court.
Contention of the Assessee:
The learned counsel for the assessee contended that the S. No. 24 of Notification NO. 6/2000-C.E., dated 1-3-2000 confers partial exemption to “Liquefied Petroleum gases and other gaseous hydrocarbons other than natural gas, ethylene, propylene, butylene and butadiene”.
He argued that the words “other than” qualify only natural gases and according to him, if read in this manner, the products which would fall within the exempted category for payment of concessional rate of excise duty would be LPG, other gaseous hydro carbons (excluding natural gas), ethylene, propylene, butylene and butadiene.
Therefore, even if C-4 Raffinate is treated as Butylene exemption under S. No. 24 of Notification No. 6/2000-C.E., would be available because specification of butylene in the said Sl. No. 24 is not for the purpose of its exclusion, but for the purpose of its specific enumeration and inclusion
Thus, the benefit of concessional rate of duty as claimed by the assessee is right in law.
Contention of the Revenue:
The basic contention of learned counsel appearing for the revenue was that the aforesaid notification exempts liquefied petroleum gases (LPG) as well as other gaseous hydro carbons and excludes specifically natural gases, ethylene, propylene, butylene and butadiene.
The product C-4 Raffinate is a mix of butylenes thus, it could be suitably classified butylene.
Henceforth, the benefit of partial exemption is not available to butylene as the same is specifically excluded.
Decision of Hon’ble Supreme Court:
The Supreme Court noted the rival submissions and observed that the expression “other than” appearing after the words “gaseous hydro carbons” and before the words “natural gas” would qualify only the words “natural gas”. In other words, the following goods are covered by the aforesaid Sl. Nos.
(i) Liquefied petroleum gas and other gaseous hydrocarbons with exclusion of natural gas,
(ii) Ethylene,
(iii)Propylene,
(iv) Butylene and
(v) Butadiene.
Thus, the classification of the same in butylene as contended by revenue safely covers the product within the eligibility of the notification.
Further, even if the description of goods against S.no. 24 of Notification No. 6/2000-C.E., is interpreted to mean that ethylene, propylene, butylene and butadiene are also excluded, then also C-4 Raffinate would be eligible for the benefit of exemption because since C-4 Raffinate is liquefied petroleum gas it is covered by the description of the “Liquefied Petroleum gases and other gaseous hydrocarbons”
Therefore, the appeal of revenue is dismissed.
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