ORDER
H.R. Syiem, Member (T)
1. The Appellate Collector’s Order No. 7/ASM/82 dated 25-1-1982 held that the CBFS was a LSFO liable to duty under Notification No. 60/76-CE, dated 16-3-1976 (amended by Notification No. 343/77-CE, dated 16-12-77) at Rs. 138.75 kl. This, the Indian Oil Corpora-tion say, was wrong.
2. Their oil was supplied as feed stock to M/s. Philips for the manufacture of carbon black. It was not a fuel oil and calling it low sulphur fuel oil was an anachronism. It was not used as a fuel oil but a raw material in an industrial process. The fact that it had a sulphur content of 0.5% is of significance only if it is used as a fuel oil.
3. The learned counsel for M/s. Indian Oil Corporation argued that their’s was an oil that conformed to item 10-CET. It was an oil that should be assessed as furnace oil. A furnace oil is different from a fuel oil. Their oil was not a fuel oil and was not used as such oil. There was no definition in the notification what a low sulphur fuel oil was. Sulphur content can be as high as 9% and hence a sulphur content of say 4% can be said to be low comparatively. The learned counsel said many more things about the error of the lower authorities in calling their oil a low sulphur fuel oil, but the main burden of his argument was that their oil should not be classed a low sulphur fuel oil because it was not a fuel oil and was not used as a fuel oil, as they can prove.
4. The learned counsel for the department said, the oil may not have been used as a fuel oil but it fell under item 10-CET in accordance with its physical tests. Its sulphur content was only about 0.5% or lower. There can be no doubt that this level is a low sulphur level. She referred to a book CHEMICAL TECHNOLOGY OF PETROLEUM by Cruse and Stevens which details the required sulphur level specifications for fuel oil, the highest being 1.25% and the lowest 0.5%. She read from Chapter 13 of “Fuel Oil Manual” by Schmidt, but the portion dealt only with sulphur in crude, and so does not relate to our problem. She also argued that the IS 1593-1971 gave 4.5% as the highest sulphur content for fuel oil. Therefore, a sulphur content of 0.5% can be nothing but a low one.
5. The basic problem is whether the CBFS with a sulphur content of 0.5% is a low sulphur fuel oil. The Assistant Collector and the Appellate Collector went by the IS and the Collectorate trade notice. The latter specified 1% as the dividing line. They also drew support from the IS which shows requircmenis of sulphur of 3.5% for LV grade fuel oil, 4% for MV grade fuel oil and 4.5% for HV grade fuel oil. The oil refinery argued that their oil was not a fuel oil, and so cannot be disqualified on a quality prescribed for fuel oils.
6. The difficulty with this argument is that a furnace oil, assessable under item 10-CET is a fuel oil. M/s. Indian Oil Corporation accept that their oil is assessable under item 10-CET. But they claim that it should receive preferential assessment as an oil otherwise that one with a low sulphur content. It is not easy to reconcile this. The refinery does not tell us what would be the oil assessable as other than LSFO ; after all, when claiming preferential assessment, the assessee should establish his claim. M/s. IOC has not done so. They seek to refute the department’s assessment of the oil as LSFO by merely saying that the oil was not a fuel oil, and so the sulphur content was not relevant.
7. But reflection will show that there is more to be said for the department’s case than for the refinery’s. A sulphur content of 0.5% not only appears low absolutely, but comparison with other fuel oils standards specified by IS also show that level to be low. The lowest sulphur level specified by IS for fuel oil is 3.5%. If 0.5% of sulphur level is not low, it is difficult to see what is. M/s. Indian Oil Corporation’s rejection of the sulphur content as irrelevant is not a correct understanding. The oil is assessable under item 10 and such assessments are made only on certain specifications prescribed by the law. It is not an argument to say that the CBFS was not used as a fuel oil. Even if it was not, it was assessable under item 10-CET which is furnace oil, a fuel oil. The oil fell on the wrong side of the qualifications of sulphur content limit for the concession sought and should be assessed at the higher rate of duty of Rs. 138.75.
8. The Appellate Collector’s order does not need to be modified. The appeal is rejected.