Full Judgment
2. Ld. DR stated that the basic issue relates to the classification of HNP (Heavy Normal Paraffin) manufactured by the Petrochemical division of the respondent.
3. The A.C. had classified it under 2710.99 but the assessee had claimed the classification under 2710.29.
4. The Collector (A) has accepted the assessees classification and they are aggrieved of the same.
5. It was the department's contention that the Heading 2710.29 covers kerosene and not HNP and therefore ld. Collector had erred in accepting the assessees appeal.
6. He further submitted that the Heading 2710.29 covers kerosene which is ordinarily used for lighting lamps and satisfies the specification mentioned in the heading whereas HNP arises in the course of manufacture of Linear Alkyl Benzene (LAB) and is different from kerosene or aviation turbine fuel covered by 2710.29. The HNP is in fact used generally in lubricating preparations and not for lighting lamps.
7. In this connection, he would draw attention to the Heading 2710.99 and would further like to add that in the Notification No. 98/89 also the HNP has been indicated against 2710.39 (apparently a typographical error for 2710.99).
8. Ld. Counsel stated that the order of ld. Collector (A) is based on Tribunal's order and is therefore, required to be upheld. In this connection, he would draw attention towards the case of Indian Petrochemicals Corporation reported in 1990 (46) E.L.T. 173 (Tribunal) in which it was held by the Tribunal that HNP conforms to the test provided for the materials classifiable under Item 7 of CET (old tariff).
9. Item No. 7 of the old tariff also cover kerosene ordinarily used as illuminant he still feel that in view of the technical specifications which it satisfies HNP was classifiable under that heading and not under Tariff Item 68. In response to queries from the Bench that the aforesaid order relates to the old tariff, the ld. Counsel stated that judgments under the old tariff also apply to new tariff where the taxing entry and product are the same as held in the case of Pratap Rajasthan Copper Foils and Laminates - 1989 (44) E.L.T. 775 and Pratap Steel Rolling Mills - 1990 (48) E.L.T. 539. It was also his submission that onus to establish classification was on the department and that they had failed to discharge this onus their claim must fail as held in the case of Hindustan Ferrodo Limited - 1997 (89) E.L.T. 16 (S.C.) and Garware Nylon Ltd. - 1996 (87) E.L.T. 12.
10. It is also his submission that where a statutory definition is given the reference to trade understanding, dictionaries etc., is not permissible. It was also his submission that the CBEC clarifications are not binding on the Tribunal, more so, liquid paraffin and HNP are distinct and in this connection he would rely on the case of Kores (India) Ltd. -1997 (89) E.L.T. 441. It was also his submission that the order relied upon by him was that of a three Member Bench and was therefore in the nature of a binding precedent for a two Member Bench.
It was also his submission that it is well settled that specific entry would prevail over a residuary entry.
11. We have considered the above submissions. We observe that during the relevant period new tariff was in force and the relevant portions of the rival entries read as follows :- 12. We observe that the department is correct in pointing out that HNP is not kerosene or ATF and is different and distinguishable from both.
Indeed this fact is recognised even by the order of the Tribunal in the case of Indian Petrochemical Corpn. Ltd. relied upon by the assessee and reproduced in 1990 (46) E.L.T. 173 (Tribunal) 13. The fact that HNP are mineral oils is not in doubt or dispute. The Tribunal has in this order interpreted the Tariff Item 7 of the old Tariff and observed that even though HNP was not kerosene it fell under Item 7 CET of the old tariff.
14. There is no doubt that new tariff item relating to kerosene is essentially similar to the Entry 7 of the old Tariff. It is also true that the entries cover kerosene which is ordinarily used as illuminant in oil burning lamps but that does not mean that this was the only use of kerosene and it is well known that kerosene could, and indeed, is also used as a fuel in kerosene stoves. Therefore, the words ordinarily used cannot be interpreted to mean exclusively used or only used, in this context.
15. Apparently the HNP is different from kerosene as commonly understood and that the two products are otherwise different has not even been denied; And, the reliance has been placed on the aforesaid order of the Tribunal on the ground that even though it recognises the fact that HNP is kerosene still it classified this product under T.I. 7 of the old Tariff.
16. It is true that normally interpretation of an entry under the old Tariff is also required to be kept in view if the entry in the new tariff is substantially the same or similar and the item or product involved is the same. Item 7 of the old Tariff reads as follows :- 7. Kerosene (which is ordinarily used as illuminant in oil burning lamps), and aviation turbine fuel, that is to say, and mineral oil (excluding mineral colza oil and turpentine substitute) which has a smoke point of eighteen millimetres or more and has a final boiling point not exceeding three hundred degrees of Centigrade thermometer - 17. Ld. Counsel is therefore correct to the extent that the entries in the old and new Tariff are substantially the same.
18. At the same time once the law changes, the decisions based with reference to old law no longer act as a binding precedent but are-required to be treated as having a persuasive value and if new facts come to light or there are other reasons to differ from the earlier interpretation the successor benches can take a different view.
19. In the present case the department has given the details of the manufacturing process and uses which have not been denied. We also note that even the order relied upon by the assessee notes that :- "They are products of subjecting 'Kerosene' to a process of separation by fractionation.... We are of the opinion that the processes applied to Kerosene resulting in the manufacture of HNPs constitute 'manufacture' for the purpose of levy of Central Excise Duty and the sub-item (ii) of Item 7, CET, namely, 'others' is wide enough to cover not only Kerosene but also HNPs which constitute a product different from Kerosene though derived from it. Thus, if HNPs are liable to taxation, it is not a case of double taxation." 20. In our opinion once two products are different and out of the two only kerosene is covered by the Tariff Entry 2710.29. Therefore, even if its smoke point was 18 mm or more or the final (sic) point did not exceed 300C that did not matter because what we are concerned is whether the product in question was a type of kerosene or not.
Therefore, with due respects we would like to differ from the view taken by the Tribunal in the aforesaid case and refer the matter to a Larger Bench.
In view of difference between opinion of this Bench and view taken in the case of Indian Petrochemical Corporation -1990 (46) E.L.T. 173 (Tribunal) the matter is referred to the Hon'ble President for constituting Larger Bench to consider the following issue:- 1. Whether Heavy Normal Paraffin (HNP) which was classified by the Bench order cited above under Item 7 of the old Tariff was classifiable on the same ground under new Tariff 2710.29 or it was classifiable under Heading 2710.99 as it is a product different from kerosene?