M/S OSWAL PETROCHEMICALS LTD. versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI - II

Citation: [2025] 4 S.C.R. 1792 · Decided: 28-04-2025 · Supreme Court of India · Bench: ABHAY S. OKA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2025] 4 S.C.R. 1792 : 2025 INSC 578
M/s Oswal Petrochemicals Ltd. 
v. 
Commissioner of Central Excise, Mumbai - II
(Civil Appeal No(s). 129-130 of 2011)
28 April 2025
[Abhay S. Oka and Ujjal Bhuyan,* JJ.]
Issue for Consideration
(i) Whether a duty demand based on reclassification of the products 
Benzene and Toluene from chapter 29 to chapter 27 is sustainable 
when such re-classification is based on test reports of which only a 
gist was provided to the appellant by the respondent; (ii) whether 
CESTAT was justified in treating the assessments provisional for 
the two products Benzene and Toluene for the months of January 
and February, 1993 in the absence of any order passed under 
Rule 9B of the Central Excise Rules, 1944 and without executing 
any B-13 bond.
Headnotes†
Central Excise Tariff Act, 1985 – Central Excise Act, 1944 – 
s.35L(b) – Central Excise Rules, 1944 – rr.9B, 56, 173B – 
Appellant filed the classification list, including two products 
of Benzene and Toluene which was approved by the Assistant 
Collector – Products of Benzene and Toluene were classified 
under chapter sub-heading 2902.00 – Approval was challenged 
on the basis of the subsequent test reports which revealed 
that purity of the two products were less than 96 percent, 
thus warranting re-classification under chapter sub-heading 
2707.10 and 2707.20 respectively – Copies of test reports were 
not furnished to the appellant – The test reports formed the 
sub-stratum of higher duty demand – Later, Assistant Collector 
passed an order directing provisional assessment of certain 
products, including products of the appellant – CESTAT in 
appeal upheld the demand of duty and treated the assessments 
provisional for the two products Benzene and Toluene for the 
months of January and February, 1993 – Challenge to:
Held: Principles of natural justice required that copies of such test 
reports ought to have been furnished to the appellant – Informing 
* Author
[2025] 4 S.C.R. 
1793
M/s Oswal Petrochemicals Ltd. v.  
Commissioner of Central Excise, Mumbai - II
the appellant only the gist of the test reports cannot be said to 
be in compliance with the principles of natural justice as the test 
reports formed the sub-stratum of higher duty demand raised by 
the department thus entailing adverse civil consequences on the 
appellant – With respect to R.56 of the Central Excise Rules, use of 
the word shall in sub-rule (2) is indicative of the mandatory nature 
of the provision – Officer who has taken the samples for testing 
has to communicate the result of such test to the manufacturer – 
On the other hand, sub-rule (4) contemplates that upon receipt of 
the test result if a manufacturer is aggrieved by the same, he may 
within 90 days of the date on which the result of the test is received 
by him, request the Assistant Commissioner that the samples be 
re-tested – Unless a copy of the test report is furnished to the 
manufacturer, he would not be in a position to seek re-test within 
the specified period – Therefore, a copy of the test report has to be 
furnished to the manufacturer – In such circumstances, extracting 
the gist of the test reports, that too in the show-cause notices, would 
clearly be in breach of r.56(2) and r.56(4) of the Central Excise 
Rules – Belated sampling and test reports casts shadow of doubt 
on the entire procedure adopted by the respondent – Therefore, 
orders re-classifying the products Benzene and Toluene under 
chapter sub-heading 2707.10 and 2707.20 respectively and levying 
consequential differential duty demand cannot be sustained in 
law – With respect to order of provisional assessment, r.9B is the 
relevant provision – In the instance case, essential requirements 
of r.9B were not complied with – There is no order of the proper 
officer u/r.9B directing that assessments for the months of January 
and February, 1993 for the two products Benzene and Toluene 
were provisional – Neither any bond in proper format was directed 
nor executed by the appellant – Thus, the order of CESTAT is 
set-aside. [Paras 37, 39, 40, 44.1, 48, 50]
Central Excise Rules, 1944 – r.9B – Essential requirements:
Held: First and foremost, requirement of r.9B is that it is the 
assessee who has to request in writing the proper officer for 
provisional assessment in the event the assessee is unable to 
determine the value of excisable goods or the correct classification 
of goods – The second requirement is that the proper officer 
com

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