1. The matter is in respect of 14 appeals by M/s. Nav Bharat Enterprises (P) Ltd., New Delhi against Orders-in-Appeal Nos. (as given above) passed by the Appellate Collector of Customs, Madras, relating to the assessment of liquid paraffin. It appears that assessment had been made under Item 11Aof the CET. Later in some cases, the assessment was changed to Item 8-CET. In the cases which were changed from Item 11A to Item 8, refund had been given providing partial elief to the importer. However, in the cases in respect of bills of entry No. 33 dated 1-8-1977, No. 828 dated 21-9-1977, No. 43 dated 1-9-1977 and 271 dated 7-9-1977, the assessment continued under Item 11A with the Appellate Collector himself, when an appeal was made to him, rejecting the claim of the party and holding that assessment under Item 11A-CET was correct. The appeal in respect of bill of entry No. 820 dated 21-2-1977, was also rejected and assessment continued under Item 11A-CET.2. The liquid paraffin had been tested at various times and the test reports in all cases showed that the goods had flash point of above 93.3C, the flame height was found to be below 10 mm and all were free from bituminous substances. However, some tests showed the viscosity at more than 100 second by Redwood I Viscometer at 100 while some show viscosity of less than this; We have, therefore, two types of liquid paraffin, one with viscosity of less than 100 seconds and another of viscosity of more than 100 seconds.
3. It was argued by the Counsel for the appellant that Item 11A covers only products from refining of crude petroleum or shale. The liquid paraffin imported by M/s. Nav Bharat Enterprises is not a product derived from refining of crude petroleum or shale. He quoted the judgment of the Ahmedabad High Court in the case of Mehta Bros v.Supdt. Central Excise (Special Civil Application No. 1175 of 1970) in which the Court observed that "the product derived from refining of crude petroleum would be covered by Item 11A but if a different commodity is produced or made by subjecting the products derived from refining of crude petroleum to a process, it would not fall within the plain language of Item 11 A". The Counsel also quoted tariff advice No.34/80 dated 26-5-1980 issued by the Central Board of Excise and Customs in which it held that liquid paraffin is not classifiable under Item 11A since that item covers only those products which are the immediate result of refining of crude petroleum or shale. The liquid paraffin is not a product derived from refining of crude petroleum. According to the above authorities liquid paraffin is not derived from the refining of crude petroleum. The Counsel also said that liquid paraffin is not a mineral oil but is a product manufactured from mineral oil such as spindle HVI Oil.
4. In respect of assessment under Item 8 as refined diesel oil, the Counsel stated that though the product can be ignited and can catch fire, its flame does not last more than 4 or 5 minutes which is not long enough for the flame height to be determined. This disqualifies the product on this account alone from being assessed as refined diesel oil, one of whose properties specified by the tariff is a flame height of 10 mm or more but less than 18 mm or which has a flame height of less than 10 mm with other conditions such as viscosity and bituminous contents. Since the flame height cannot be determined, it should be held not to conform to this part of the specifications. In respect of bituminous content, the learned Counsel for the appellant held that all the samples were found on test to be free from bituminous contents. The tariff" item requires that the oil should contain less than 1 quarter of 1% of bituminous substance. In other words, the tariff requires that the oil should contain bituminous substance but that such bituminous substance should be less by 1 quarter of l%. An oil which is free from bituminous substance cannot be said to contain less by 1 quarter of 1 % of such substance by weight. In simple terms he does not accept that as a mathematical quantity 0 is less than one quarter.
5. The learned Counsel for the Dept. opposed the appellant, saying that paraffin oil is derived from products which are derived from crude petroleum. It is not necessary that the product should result during direct refining or distillation or fracnonation; it is enough if the product is a compound of any other derivative of the distillation or fractionation of crude petroleum. The liquid paraffin is without doubt such a product and therefore, can qualify for assessment under Item 11 A. The judgment of the Gujarat High Court was with respect to indigenous goods i.e. lubricating oil blended from other Central Excise duty paid lubricating oils. The judgment therefore, will not affect imported liquid paraffin as there is no information as to their method of manufacture. He refuted too the argument of the Counsel for the appellant in respect of the flame height by saying that the test had conclusively shown that the flame height was below 10 mm and also was in conformity with the other properties specified under Item 8. He says that the learned Counsel for the appellant was in error when he says that total absence of bituminous substance disqualified the oil from item 8 because absence of bituminous substance is equal to containing less than one quarter of 1%. The item does not contemplate a presence of bituminous substance but a presence of as little as possible of such substance. When it contains zero value of bitumi-nous substance, it contains less than 1 quarter of 1%. Therefore, assessment of the oils under Item 8 was correct since they conform to the properties specified by the item.
6. We feel that Item 11A can be ruled out both because of the ruling of the Gujarat High Court quoted above and of the ruling of the CBEC in its tariff advice No. 34/80 dated 26-5-80 which establish that liquid paraffin not being derived from the refining of crude petroleum would not be assessable under Item 11A. We agree that a product must be derived from refining of crude petroleum and not be a product obtained by reforming, blending or otherwise treating products derived from the refining of crude petroleum.
7. In respect of assessment under Item 8 we are unable to agree with the reasoning of the learned Counsel of the appellant. He argued that the test had not been carried out in a proper manner -according to prescribed procedure ; but we can find nothing on record that he had raised this before the Asstt. Collector or the Appellate Collector. Nor is there anything on record to show that he had asked for retest to determine the flame height. It is too late now for the Tribunal to go into this question and therefore, our finding on this account must go against the appellant. The subject of the presence of bituminous substance was vehemently argued by the learned Counsel for the Appellant but we are unable to agree with his reasoning because there can be no getting round the fact zero content is less than one quarter of 1%. The arguments of the appellant is a mathematical incongruity and we are unable to accept it.
8. We accordingly order that all the products which conform to the specifications for refined diesel oil as listed under Heading 8 of the Central Excise Act, that is to say, those consignments which, on test, were found to have a flame height of less than 10 mm but had a viscosity of less than 100 seconds by Red Wood I Viscometer at 100F and which were free from bituminous substance would be assessed under item 8 of CET. The other consignments which on test, were found to have a flame height of less than 10 mm and a viscosity of more than 100 seconds at 100F by Red Wood I Viscometer and were free from bituminous content would not qualify assessment under Item 8 nor under Item 11A for reasons we have discussed above. These should be assessed under Item 68.
9. As a result of the above order and the consequential reassessment that may become necessary, refund should be given of the amounts collected in excess. This order disposes of all the 14 appeals.