These batch of appeals pertain to Indian Petrochemical
Corporation Limited (in short 'IPCL') and in the fourth JUDGMENT appeal, the assessee is Indian Oil Corporation.
IPCL is engaged in the manufacture of various types of
petrochemicals, falling under Chapter 27 and 29 of Central
Excise Tariff Act, 1985. It holds valid Central Excise
registration under Rule 174 of the Central Excise Rules
1944. One of the products which is manufactured by IPCL is
C4 Raffinate. On this, the IPCL has been paying 8 per cent
duty, as it has been claiming the benefit of Notification
No. 6/2000 dated 01.03.2000. We may mention that the normal
rate of duty of the aforesaid product is 16 per cent.
However, by virtue of the aforesaid notification, in respect
of certain products duty is halved. The question arose as
to whether the IPCL is entitled to the benefit of the
aforesaid notification and in that context, the issue of
classification of this product fell for consideration. The
IPCL has classified the product under chapter sub-heading
2711.19. Chapter Heading Entry 27.11 reads as under: -
27.11 Petroleum gases and other gaseous hydrocarbons
- Liquefied :
2711.11 - Natural gas
2711.12 - Ethylene, propylene, butylene and
butadiene
2711.19 - Other
--In gaseous state:
2711.21 - Natural gas
2711.29 - Other
As per the Department, the aforesaid product should
have been classified under Chapter Heading 2711.12 as JUDGMENT butylene. On that basis, show cause notice was issued
demanding excise duty at the rate of 16 per cent ad valorem
and asking the IPCL to pay the differential duty as duty
paid by IPCL was at the rate of 8 per cent. The IPCL
replied to the show cause notice sticking to its position
that the as per the aforesaid exemption Notification, 50 per
cent of the duty of excise specified in the First Schedule,
was payable.
In the Order-in-Original passed by the Commissioner,
the demand of duty as claimed in the show cause notice was
confirmed rejecting the contention of the IPCL. However, in
an appeal filed before the Customs, Excise and Service Tax
Appellate Tribunal (hereinafter referred to as 'CESTAT'),
IPCL has emerged successful inasmuch as its contention is
accepted.
On going through the order of the Commissioner as well
as the CESTAT, we find that both the authorities below have
entered into the various facets of the dispute and gone into
the entire gamut of controversy. Many of the findings of
the Commissioner in his order have not found favour with the
CESTAT in the impugned decision rendered by it. We have
heard learned counsel for the parties on all the aspects and
have gone through the orders minutely through which we were
taken by the learned counsel appearing for the parties. We
are, however, of the opinion that it is not necessary to JUDGMENT even advert to all those aspects of the matter inasmuch as
the fulcrum of the dispute pertains to the interpretation
which is to be accorded to the language used in Notification
No. 6/2000 which confers, as mentioned above, partial
exemption. It reads as under: -
Chapter Description of Rate under Rate Condition or goods the First under No. heading Schedule the No. or Second sub-headi Schedule ng No. 27.11 Liquefied Fifty per - -
Petroleum Gases cent of the
and other duty of
gaseous excise
hydrocarbons specified in
other than the First
natural gas, Schedule
ethylene,
propylene,
butylene and
butadiene
The basic contention of Mr. Yashank Adhyaru, learned
senior counsel appearing for the appellant, was that the
aforesaid notification exempts liquified petroleum gases
(LPG) as well as other gaseous hydro carbons and excludes
specifically natural gases, ethylene, propylene, butylene
and butadiene. On the other hand, learned counsel appearing
for the respondents have argued that the words “other than”
qualify only natural gases and according to him, if read in JUDGMENT 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.
We find that the construction as sought to be given by
IPCL appears to be correct. This aspect has been dealt with
by the CESTAT in para 5.5 of the judgment and since we are
agreeing with the said interpretation given by the Tribunal,
we reproduce hereunder the said para in its entirety: -
“5.5 As regards the eligibility to the Notification
Sr. No. 24 thereof, it is found -
(i) Sl. 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”. (emphasis
supplied)
In the aforesaid Sl. No. 24 of Notification No.
5/2000, there is no comma after the words 'gaseous
hydrocarbons'. Therefore, 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.
The above submissions is reinforced by a comparison
with Sl. No. 30 of Notification No. 75/84-C.E., dated
3-3-1984 as introduced by Notification No.
120/86-C.E., dated 1-3-1986 which stood in the
manner, dining the entire period from 1-3-1986 to
28-2-1994.
F.5 The said Sl. No. 30 of Notification No.
75/84 reads thus:
“Liquefied petroleum gases and other gaseous hydrocarbons, JUDGMENT
other than natural gas, ethylene, propylene, butylene and
butadiene”.
as in the above Notification No. 75/84, there was a
comma after gaseous hydrocarbons, unlike present
Notification No. 6/2000, Sl. No. 24 thereof.
Therefore, even if C-4 Raffinate is treated as
Butylene Sl. No. 24 of Notification No. 6/2000-C.E.,
would be applicable, specification of butylenes in
the said Sl. No. 24 is not for the purpose of its
exclusion, but for the purpose of its specific
enumeration and inclusion.
(ii) Even if the description of goods against Sl.
No. 24 of Notification No. 6/2000-C.E., is
interpreted to mean that ethylene, propylene,
butylenes and butadiene are also excluded, then C-4
Raffinate is not excluded since it is not exclusively
a or any 'butylene' but is a mix of 'butylenes'. In
view of the findings arrived in paras supra.
However, since C-4 Raffinate is liquefied petroleum
gas it is covered by the description of the
“Liquefied Petroleum gases and other gaseous
hydrocarbons” under Sl. No. 24 of the above
notification, Raffinate, even if it is assumed as
butylene is not excluded from coverage of Sl. No. 24
of the Notification No. 6/2000, but would stand
included in the first part of the Notification as
liquefied petroleum gases.
(iii) The order of the Commissioner on the question
of availability of exemption Notification No.
6/2000-C.E., dated 1-3-2000 and No. 3/2001-C.E.,
dated 1-3-2001 is purely based on the intention of
the legislature on the basis of the Finance
Minister's speech. However, it is well settled legal
position that the notification has to be interpreted
on the basis of plain meaning of words and intention
behind the notification cannot be a basis to
interpret the notification. Commissioner has not
refuted any of the submissions made by the
appellants, on the interpretation of the
notification. If the interpretation of the
department on Sr. No. 24 of Notification No.
6/2000-C.E., dated 1-3-2000 and Sr. No. 34 of
Notification No. 3/2001-C.E., dated 1-3-2001 is
accepted then the simple way of giving the
description of the goods under the said Sr. Nos. of
the Notifications, would have been “goods falling
under sub-heading 2711.19”, if the Government wanted
to extend the concessional rate of duty in respect of liquefied petroleum gas and other hydrocarbons except
natural gas. Hence the interpretation as adopted by
the Commissioner based on the intention of the
legislature on the basis of Finance Minister's speech
is wholly incorrect.”
Insofar as Indian Oil Corporation is concerned, the
only difference is that it is manufacturing a product known
as propylene. Since it is also one of the products which
qualifies for partial exemption from payment of duty by
Notification No. 6/2000 dated 01.03.2000, result in both the
cases would be the same.
Consequently, all these appeals preferred by the
Department are hereby dismissed.
[ A.K. SIKRI ]
New Delhi; May 12, 2015.