ORDER
S.S. Kang, Vice President
1. Heard both sides. The appellant filed this appeal against the order-in-Appeal passed by the Commissioner (Appeals).
2. Brief facts of the case are that the appellant had cleared down graded Aviation Turbine Fuel as Superior Kerosene Oil and paid appropriate duty leviable of SKO whereas Revenue is demanding duty treating the same as Aviation Turbine Fuel.
3. The contention of the appellant is that as per the test report relied upon by the Revenue, the oil is not upto the specification of Aviation Turbine Fuel as such it was cleared as SKO. The appellant also relied upon the decision of the Tribunal in the case of IOC Ltd. v. CCE, Chandigarh .
4. The Revenue reiterated the findings of the lower authorities. We find that issue is already settled by the decision of the Tribunal in the case of IOC Ltd. The Tribunal held as under:
5. There is no dispute in the present case that the warehoused ATF in question had actually been down graded to SKO and sold as such. Warehoused goods are to be removed on payment of duty as applicable to them at the time of their removal from the warehouse. If the goods undergo any change during warehousing, making them liable to duty at a rate different from the duty assessed at the time of warehousing the goods are to be assessed to duty as applicable to the new goods Rule 159 of the Central Excise Rules makes the position very clear. We read the Rule for case of understanding of the case:
Rule 159. Re Assessment, if, after any goods are entered for warehousing
(a) any alteration is made in the rate of duty leviable thereon, or in the tariff valuation (if any) applicable thereto, or
(b) the goods are sorted, separated, crushed, or subjected to any other process which causes the goods or any part thereof to become liable to duty at a rate other than that at which they were assessed on entry into the warehouse, the goods shall be reassessed in accordance with such alteration.
6. In the present case during storage the goods under-went deterioration on its own. Consequent to this the goods became not saleable as ATF on account of stringent quality control in respect of ATF. It could be disposed of only as SKO and the appellant disposed of the goods as such. The down grading in the present case could be treated only as sorting and separation as envisaged in Rule 159. The Rule specifies terms that such sorted and separated goods shall be reassessed in accordance with such alteration, in the present case as SKO.
5. In view of the decision of Tribunal in the case of IOC (supra) as the goods were cleared as SKO, therefore, the impugned order is set aside and the appeal is allowed.
Order dictated in the open Court.