Blended lubricating oils and greases remain excisable when processed into a new product, despite prior duty on inputs.

Soap base greases produced by blending or compounding duty-paid lubricating oils with fats and chemicals fell within Item 11B of the First Schedule to the Central Excises and Salt Act, 1944. The lubricating oils remained mineral oils within the statutory definition, and the addition of other ingredients created a new finished product that was still covered by the tariff entry. Prior payment of duty on the inputs did not exclude the resultant greases from excisability; if any relief was available, it lay in claiming credit under Rule 56A rather than in denying excise liability on the final product.

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Issues: Whether soap base greases manufactured by blending or compounding duty paid lubricating oils with other ingredients fell within Item No. 11B of the First Schedule to the Central Excises and Salt Act, 1944 and were liable to excise duty.

Analysis: Item No. 11B covered blended or compounded lubricating oils and greases obtained either by straight blending of mineral oils or by blending or compounding mineral oils with other ingredients. The lubricating oils used by the appellant remained mineral oils, since they were derived from petroleum and continued to answer the statutory description of mineral oil in Explanation 1 to Item No. 6. The addition of fats and chemicals produced a new finished product, and the fact that some inputs had already suffered duty did not take the resultant greases outside the tariff entry. If duty had already been paid on the inputs, the remedy was to seek credit under Rule 56A, not to deny excisability of the final product.

Conclusion: The greases were excisable under Item No. 11B and the challenge to the show cause proceedings failed; the decision was against the assessee.

Ratio Decidendi: Where lubricating oils remain mineral oils within the statutory definition and are blended or compounded with other ingredients to produce greases, the finished product falls within Item No. 11B and is dutiable, notwithstanding prior payment of duty on the inputs; the appropriate relief is credit under the rules, not exemption from excise liability.

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