Exemption notification to be strictly interpreted and interpretations given elsewhere cannot be imported therein

Brief Facts of the case:

The appellant (assessee) is manufacturing Linear Alkyl Benzene Feed Stock (LABFS) and Low Aluminum Rolling Oil (LARO).The order passed by the adjudicating authority dated 30.9.2010 does not dispute the classification of both the above products under CETH 2710.29 but the second order in original dated 31.12.2012 held that both the products to be classifiable under CETH 2710.99.Revenue was of the opinion that both these products are not eligible to exemption under Notification No. 75/84-CE as the said exemption is applicable to such Kerosene which is ordinarily used as illuminant in oil burning lamps.

Thus, the exemption u/NN. 75/84-CE was denied to the assessee. Aggrieved by the order of Commissioner of Central Excise assessee preferred an appeal before the CESTAT.

Contention of the Assessee:

The learned counsel for the assessee contended that as per tariff description under CETH 2710.29 Kerosene represents a group of hydrocarbons which should have following characteristics.

(a) It is a mineral oil

(b) It should have smoke point of 18mm or more

(c) It should have FBP not exceeding 3000C; and

(d) It should not be mineral Colza Oil and turpentine substitute.

He claimed that both LABFS and LARO manufactured by the appellant have these characteristics and will be classified under CETH 2710.29 and will be eligible to Notification No. 75/84-CE which exempts all categories of Kerosene as no specific Chapter heading or sub-heading is mentioned in the exemption notification and no intended use/condition is specified in the exemption Notification No. 75/84-CE.

Contention of the Revenue:

The learned counsel for the revenue contended that since dispute pertains to a different period, therefore Revenue can seek a different classification in view of the law laid down by the Apex Court in the case of BSNL vs. UOI. Learned He emphasized that for the earlier show cause notice, Revenue is seeking classification under 261029 of the CETH and for the later period show cause notice, the classification is claimed under CETH 271099.

He further contended that both LABFS and LARO are not cleared by the appellant as Kerosene and the same are also not ordinarily used for illuminate in oil burning lamps.

Thus, these two products cannot be termed as Kerosene as intended in the exemption

Notification because the same not cleared as Kerosene in the public distribution system and also not useful ordinarily only for illuminating the oil burning lamps.

Thus, the Commissioner was right in concluding that the exemption benefit not available.

Decision of the Tribunal:

The tribunal after hearing the rival submissions observed that the term Kerosene, though a commonly understood term, has been defined by the Legislature and the definition contains the technical terms smoke point and final boiling point. If the intention of the Legislature was to restrict the scope of the term to Kerosene properly so called, and as popularly understood, there would appear to have been no need to define the term. As per tariff description under CETH 2710.29 Kerosene represents any mineral oil (excluding mineral colza oil and turpentine substitute), other than A.T.F., which has a smoke point of 18 mm or more and has final boiling point not exceeding 3000C falls to be classified as Kerosene under CETH2710.29, though it may not be Kerosene as ordinarily understood and ordinarily used as an illuminant in oil burning lamps.

So far as admissibility of exemption under Notification No. 75/84-CE to the appellant is concerned, the tribunal observed that normally it is practice that in case of any doubt or ambiguity, taxing provision is normally construed in favour of the assessee but when it is case of granting some exemption then there should be strict interpretation. The word Kerosene used in the exemption Notification 75/84-CE therefore, cannot be understood by taking recourse to parameters given to Kerosene under CETH 2710.Thus, the strict interpretation exempt only the kerosene cleared in the public distribution system and ordinarily used for illuminating of oil burning lamps.

Thus, the appeal of the assessee was dismissed.