selling of used oil

[Tejas Gandhi]

Dear Sir,

We bought fresh oil from some vendor on excise invoice . we have taken cenvat credit on fresh oil and it is used in hydraulic system, Equipment & gear box for operation for equipment maintenance. After during this process generate used oil. It is not manufacturing process.

This generated used oil we want to sales to customer so that in invoice whether charged Excise duty or not ?

Kindly need your suggestion.

[Rajagopalan Ranganathan]

Sir,

No manufacturer of excisable goods will consciously manufacture waste. Therefore used oil is a waste product. Hence it is not excisable and dutiable. However from 1.3.2015 vide Notification No.6/2015-CE (NT) dated 1.3.2015 non excisable goods are also exempted goods. Therefore you have to pay 6% of the price charged for such waste oil in lieu of the credit taken on fresh oil.

AI Summary

Waste oil classification requires payment in lieu of cenvat credit on sale under exemption notification for non-excisable goods
Used oil generated from use of fresh oil on which cenvat credit was taken is a waste product and not excisable; however, under Notification No.6/2015-CE (NT) non-excisable goods are treated as exempted goods and a specified levy is payable in lieu of the credit taken on fresh oil when the used oil is sold, creating a compliance obligation to remit that amount on the sale price.