Distinct words in an exemption notification must be separately applied; blended mineral oils qualified as speciality oil and were exempt.

An exemption notification must be read by giving separate effect to the distinct expressions used in its definition. On that construction, "blending" covered straight blending of mineral oils of the same type, while "compounding" addressed mixing with other oils or substances. Reading the notification with its background, earlier tariff position and departmental understanding, blended mineral oils produced by mixing two mineral oils were treated as "speciality oil" within Notification No. 287/86-C.E. The product therefore qualified for exemption, and the Revenue's contrary view was rejected.

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Issues: Whether blended mineral oils, when produced by blending two mineral oils together, fall within the expression "speciality oil" in Notification No. 287/86-C.E. dated 05-05-1986 and are entitled to exemption.

Analysis: The Explanation in the notification uses the expressions "blending" and "compounding" disjunctively, and each word must be given independent effect. "Blending" was understood as straight blending of mineral oils of the same type, while "compounding" referred to mixing mineral oils with other oils or other substances. The background of the notification, the earlier tariff position, and the contemporaneous departmental understanding supported the view that speciality oils included oils blended from mineral oils themselves and were meant to maintain the earlier uniform duty structure for such oils.

Conclusion: Blended mineral oils produced by mixing two mineral oils are covered by the notification and qualify as speciality oil; the Revenue's contrary contention was rejected.

Final Conclusion: The exemption under Notification No. 287/86-C.E. applied to the product in question, and the Revenue's appeal failed.

Ratio Decidendi: Where an exemption notification uses distinct expressions in the definition of a covered product, each expression must be given separate effect, and a blended mineral-oil product may fall within the exemption if the language and context show that straight blending of mineral oils was intended to be included.

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