1996(01)LCX0114
IN THE CEGAT, COURT NO. III (OLD BENCH `C’), NEW DELHI
S/Shri K.S. Venkataramani, Member (T), K. Sankararaman, Member (T) and G.A. Brahma Deva, Member (J)
COLLECTOR OF C. EX., VADODARA
Versus
GUJARAT STATE FERTILIZERS CO. LTD.
Final Order No. 55/96-C, dated 8-1-1996 in Appeal No. E/1085/94-C
Cases Quoted
Nat Steel Equipment Pvt. Ltd. v. Collector — 1988(01)LCX0006 Eq 1988 (034) ELT 0008 (SC) [Paras 4, 5]
Collector v. Roha Dyechem Pvt. Ltd. — 1989(03)LCX0059 Eq 1989 (041) ELT 0667 (Tribunal) [Para 5]
Advocated By : Shri J.P. Singh, JDR, for the Appellant.
Shri Willingdon Christian, Advocate, for the Respondents.
[Order per : K. Sankararaman, Member (T)]. - Collector of Central Excise, Vadodara has filed this appeal against the Order-in-Appeal dated 1-2-1994 passed by Collector of Central Excise (Appeals), Ahmedabad holding that the product, Synthesis gas is properly classifiable under Heading 27.05 of the Central Excise Tariff. The said decision was taken by him while allowing the appeal filed before him by M/s. Gujarat State Fertilizers Company Limited (who are respondents before us in the present proceedings) and setting aside the classification under Tariff sub-heading 2804.90 decided by the Assistant Collector of Central Excise, Division I, Vadodara for the product in question.
2. In the appeal, it has been stated that exemption Notification 415/86-C.E., dated 15-9-1986 as amended by Notification 114/89-C.E., dated 12-4-1989 provides for exemption from duty to ammonia and synthesis gas falling within Chapter 28 of the Central Excise Tariff. It has, therefore, been contended that the product synthesis gas is classifiable under Chapter 28 and not Chapter 27 as held by Collector (Appeals). It is then contended after comparing the composition of synthesis gas that the subject product with coal gas, water gas and producer gas which are covered by Tariff Heading 27.05 that synthesis gas does not resemble any of the gases covered under the said Tariff heading. It has, therefore, been urged that the same is not classifiable under Heading 27.05 but under 2804.90.
3. Shri J.P. Singh, learned Departmental Representative adopted the reasoning spelt out in the appeal. He referred to the definition of the terms covered under Tariff Heading 2705.00 as given in the Glossary of Chemical Terms Gessner G. Hawley and pointed out that the composition of these gases is not similar to the subject product. None of them contains the Rare gas, argon which is present in it. The Deputy Chief Chemist, Central Revenue Control Laboratory has overstepped his role while giving his technical opinion regarding synthesis gas. He had wrongly opined that since exemption is available under Notification 40/85; the question of marketability of the product loses its significance. The product is marketable and is in fact supplied to Heavy Water plant. He pleaded that the appeal be allowed and the impugned order-in-appeal set aside.
4. The arguments were opposed by Shri Willingdon Christian, learned counsel for the respondents. He submitted that the Tariff Heading 2705.00 under which they had sought classification of the item in question and which had been accepted by Collector (Appeals) is not confined only to the three gases, Coal gas, Water gas and Producer gas. That heading also covers similar gases other than petroleum gases. Their case is that this entry “similar gases” covers synthesis gas. He referred to the Supreme Court judgment in Nat Steel Equipment Pvt. Ltd. v. Collector of Central Excise reported in AIR 1988 Supreme Court 631 = 1988(01)LCX0006 Eq 1988 (034) ELT 0008 (S.C.) and stated that the scope of the term “similar” has been dealt with therein; synthesis gas is similar to the other gases referred to in Heading 2705.00. On the other hand, Tariff Heading 2804 covers onlyHydrogen, Rare gases and other non-metals. This entry does not cover their product. He pleaded that the department’s appeal be dismissed.
5. We have considered the submissions of both sides. We have perused the record. The appeal relies upon Notification No. 415/86 wherein synthesis gas has been referred to as falling under Chapter 28 of the Central Excise Tariff. The respondents are correct in contending that an exemption Notification is not an indicator of the correct classification of the goods under the Tariff. The Tribunal’s decision in Collector of C. Excise, Bombay-III v. Roha Dyechem Pvt. Ltd. reported in 1989(03)LCX0059 Eq 1989 (041) ELT 0667 (Tri.) = 1989 (022) ECC 140 cited by their learned counsel supports this stand of theirs. It was held therein that it is settled law that while statutory notifications may be looked up for the purpose of ascertaining the scope of entries in the Tariff Schedule they could not be used to determine or settle disputed classification of goods for which the relevant headings and section notes and chapter notes read with relevant judgments if any are the guidance. On the above basis, we find that Tariff Heading 2804 is not applicable for the product in question as that Heading covers Hydrogen, Rare gases and other non-metals. These are individual chemical elements whereas the product in dispute is a mixture of gases of more than one element. It also includes a compound, Methane. The composition is reported to be Hydrogen, Nitrogen, Methane and argon. The said product is similar to the products specified in Heading 2705.00. The expression “similar” as laid down by the Supreme Court in the Nat Steel Equipment case cited by the learned counsel, does not mean identical but means corresponding to or resembling to in many respects; somewhat like or having a general likeness. The statute does not contemplate that goods classed as similar shall, in all respects be the same. If it did, these words will be unnecessary. These were intended to embrace similar goods but not identical with those goods. The contention in the appeal is that it does not resemble any of the gases mentioned in Tariff Heading 2705 and that the constituents are different. It is also contended that the percentage composition of the gas under reference does not tally with the composition of coal gas, water gas and produces gas. This is an unacceptable proposition. If the composition were to tally, the product will be identical and not similar. The observations of the Supreme Court in the Nat Steel Equipment case are applicable. The item synthesis gas has similarities with the other products specified in the Tariff Heading, namely, coal gas, water gas and producer gas in the matter of general composition, method of production and use. The contention against the opinion of Deputy Chief Chemist which had been accepted by the Central Board of Excise & Customs is untenable. Collector (Appeals) has referred to the Deputy Chief Chemist’s report on his visit to the appellants’ factory as per the direction of the Board. The following portion of the Deputy Chief Chemist’s report which has been extracted in the order-in-appeal is reproduced below : -
“In the GSFC, feed stock is raw naphtha and natural gas. Here the process of steam reforming is followed for converting the hydrocarbons in the natural gas and raw naphtha into carbon monoxide. In the first step known as primary reforming the feedstock and steam are passed through the reformer tubes which are maintained at 750 to 800 degree C. The reaction between Hydrocarbon and steam takes place in these tubes in the presence of nickel catalysts to yield a mixture of carbon monoxide, hydrogen and carbondioxide. This is followed by the secondary reforming where air is introduced to convert the carbon monoxide to carbon dioxide. This yields a mixture of hydrogen (53%) carbon monoxide (13%), carbon dioxide (11%) and nitrogen (21%) together with negligible amounts of methane and argon. This mixture is also subjected to shift conversion to convert practically all the carbonmonoxide to carbon dioxide and produce more hydrogen. Carbon dioxide and other impurities are removed from this mixture to obtain a mixture of hydrogen and nitrogen in the ratio of 3 : 1. This is compressed and sent to the adjoining heavy water plant of the Department of Atomic Energy. There the hydrogen isotope, deuterium, is recovered from the gas mixture and the latter returned to the fertilizer plant for proceeding with the synthesis of ammonia.”
6. Collector (Appeals) has then noted that the Deputy Chief Chemist had, however, stated that the mixture is itself known as synthesis gas as seen from the Encyclopedia of Chemical Technology by Kirk Othmer and that the Board had accepted this report. He, therefore, held that the case appeared to be supported by the most authentic authority for classifying synthesis gas under Tariff Heading 27.05. He then proceeded to observe that as per Harmonised System of Nomenclature (HSN, for short) Heading 27.05 includes mixture of gases formed by cracking or reforming of mineral oils, petroleum gases or natural gases usually in the presence of steam. In the appellants’ case they undertake working of raw naphtha i.e., mineral oil in the presence of steam. It was hence held by him that the product is in conformity with the provisions of HSN. The classification under Chapter 28 pressed in the appeal which has been found to be untenable by us, as indicated above, had been considered by the Collector (Appeals) also when he rejected the stand taken by the Assistant Collector. As this finding is concurred with by us, we uphold the impugned order and dismiss the appeal filed by the department.
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Equivalent 1996 (83) ELT 624 (Tribunal)