2026-VIL-1009-GUJ-CE
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CENTRAL EXCISE High Court Cases

Central Excise – Classification of N-Hexane, Availability of CENVAT credit, Supplier's classification as against correct tariff classification – Appellant engaged in manufacture of Technical Grade Pesticides availed CENVAT credit on N-Hexane purchased from supplier who classified it under Chapter Heading 2710.12 (Chapter 27). Respondent denied credit on ground that goods falling under Chapter 27 excluded from input definition under Notification No. 5/94 dated 01.03.1994. Appellant challenged denial before Commissioner (Appeals) and CESTAT who confirmed the demand – Whether N-Hexane is classifiable under Chapter 29 and thus eligible for CENVAT credit notwithstanding supplier's classification under Chapter 27 – HELD – On plain reading of relevant chapters, N-Hexane is a separately defined chemical compound with molecular composition C6H14 and definitive structural diagram satisfying conditions to be classified as Acyclic Saturated Hydrocarbon under Chapter 29 and not Motor Spirit under Chapter 27. For a product to qualify as Motor Spirit under Chapter 27, three conditions must be satisfied namely that it is a hydrocarbon oil excluding crude mineral oil, has flash point below 25°C and is suitable for use as fuel in spark ignition engines - Mere assertion that flash point is below 25°C is insufficient without cogent evidence that imported product was used as fuel in spark ignition engines. Respondent failed to discharge burden of proving that N-Hexane was Motor Spirit. N-Hexane is used as solvent for extraction of vegetable oils and manufacture of HDPE. Impurities present in imported product are unconverted starting materials at negligent percentage and do not suppress characteristic of N-Hexane. Percentage of n-Hexane in chemical analysis report is congruent with standard specifications – The Supreme Court in Reliance Industries case held that classification of N-Hexane under Chapter 29 was already clarified by DGFT in Policy Circular dated 14.07.2004 which bound the authorities. Mere fact that supplier mentioned wrong chapter heading in invoice would not determine availability of CENVAT credit when input is required to be classified under Chapter 29 – Appellant is entitled to CENVAT credit on N-Hexane. Supplier's classification is not determinative of correct tariff classification – The appeal is allowed
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