2005 (2) TMI 847 - SC - Central Excise

Supreme Court Confirms Broad Application of Exemption Notification No.120/84-CE; 'Super TT' Falls Under Residuary Heading.

Castrol India Limited Versus Commissioner of Central Excise, Calcutta-I

The SC set aside the majority view of CEGAT, confirming the minority opinion that the Exemption Notification No.120/84-CE applies broadly, without ... Oil - Lubricating oils - benefit of Notification No. 120/84-C.E. - assessee appellant claimed that the same is not classifiable under Heading 2710.60 of the Tariff under Customs Tariff Act, 1985 (’Tariff Act’) as the same covers lubricating oils having flash point more than 94:C - Product was claimed to be classifiable as ’others’ under sub-heading 2710.99 - HELD THAT:- Undisputedly in the present case there was no reference to any tariff entry in the Notification. Therefore, the majority view is clearly unsustainable. Additionally, we find that CEGAT had in some other cases taken the same view as the minority view. It is fairly accepted by learned Additional Solicitor General that there has been no challenge to the said decisions one of which is Bharat Petroleum Corporation Ltd. v. Commissioner of Central Excise, Kolkata-I [2002 (10) TMI 624 - CEGAT, KOLKATA]. Exemption Notification 120/84-CE dated 11.5.1984,in view of what is prescribed in Section 5A(4) of the Act, continued to be operative and effective as it was not amended, varied, rescinded or superseded under the provisions of Section 5A of the Act. The sub-heading 2710.60 significantly uses two expressions. They are (i) 'that is to say' and (ii) 'excluding'. The first expression is used in description, enumerative and exhaustive sense and to a great extent circumscribes the scope of the entry. But the second expression dilutes the pervasiveness by carving out an exception for the purpose of the particular sub-heading a particular type of lubricating oil. All other types of lubricating oil are covered by the residuary entry i.e. 2710.99. Under the Notification 120/84CE lubricating oil was exempted without reference to any tariff heading/sub-heading. Consequently, the criteria specified in the Notification were satisfied. That being so, majority view contained in the order of the CEGAT is not sustainable and is set aside. The minority view as expressed is confirmed. The appeals are allowed with no order as to costs. Issues Involved:1. Classification of 'Super TT' under the Customs Tariff Act, 1985.2. Applicability of Exemption Notification No.120/84-CE.3. Invocation of the extended period of limitation for issuing show-cause notices.4. Interpretation of the terms 'that is to say' and 'excluding' in sub-heading 2710.60.Issue-wise Detailed Analysis:1. Classification of 'Super TT' under the Customs Tariff Act, 1985:The appellant is engaged in the manufacture of blended or compounded lubricating oils, including a product called 'Super TT.' The appellant claimed that 'Super TT,' with a flash point below 94^0C, should be classified under sub-heading 2710.99 as 'others' rather than under sub-heading 2710.60, which covers lubricating oils with a flash point above 94^0C. The Revenue disputed this classification, asserting that since there is no other heading for lubricating oil in the Tariff Act, the product should fall under sub-heading 2710.60.2. Applicability of Exemption Notification No.120/84-CE:The appellant argued that Exemption Notification No.120/84-CE, which exempts blended or compounded lubricating oils from excise duty, should apply to all types of lubricating oils, irrespective of their classification under specific tariff entries. The Revenue contended that the exemption is limited to lubricating oils classified under sub-heading 2710.60. The Tribunal's majority view, which included the Technical Member and the third member, agreed with the Revenue, while the Judicial Member supported the appellant's broader interpretation of the exemption.3. Invocation of the extended period of limitation for issuing show-cause notices:The appellant received two show-cause notices demanding duty for different periods, alleging suppression of facts. The appellant argued that there was no suppression and that the notices were issued beyond the prescribed period of limitation. The Revenue maintained that the appellant's incorrect classification and claim of exemption indicated mala fide intentions, justifying the invocation of the extended period of limitation.4. Interpretation of the terms 'that is to say' and 'excluding' in sub-heading 2710.60:The Supreme Court analyzed the terms 'that is to say' and 'excluding' used in sub-heading 2710.60. The Court explained that 'that is to say' is descriptive, enumerative, and exhaustive, limiting the scope of the entry, while 'excluding' carves out exceptions. The presence of these terms indicated that lubricating oils with a flash point below 94^0C could fall under the residuary heading 'others' (sub-heading 2710.99).Judgment Summary:The Supreme Court held that the majority view of the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT) was unsustainable. The Court emphasized that Exemption Notification No.120/84-CE did not reference any specific tariff heading or sub-heading, and thus, the criteria specified in the Notification were satisfied. The Court also noted that other cases decided by CEGAT had taken a similar view as the minority opinion in this case. Consequently, the Supreme Court set aside the majority view of CEGAT and confirmed the minority view, allowing the appeals with no order as to costs.