TaxTMI 
TaxTMI 
1985 (12) TMI 220
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....ese appeals relate to cases occurring before as well as after the amendment and renumbering, it has been assumed for convenience that the applicable entry throughout was sub-item (2), with the description "waxes". It was the contention of M/s. Heeral that the relevant Central Excise Item was T.I. 68, and on this basis they filed appeals to the Collector (Appeals) in each of the 15 cases before him. (For convenience the first appellate authority in all the cases is referred to as the "Collector (Appeals)"). Four out of the 15 appeals were allowed by the Collector (Appeals), holding that the applicable item was T.I.68. Against these four orders the Collector of Customs, Bombay, has come up in appeal to the Tribunal, and these appeals bear Nos. C.213/ 85-C, C.214/85-C, C.361/85-C and C.362/85-C. In the other 11 cases the Collector (Appeals) rejected the appeals, upholding the classification adopted by the Customs authorities, namely T.I.11(2). Against these orders M/s. Heeral had come up to the Tribunal and these constitute the remaining 11 appeals which are covered in this order. 2. The basic question involved in all the appeals is whether the Micro-crystalline Wax imported by M/s. ....
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....cial decisions to the effect that the term "including" is one of extension, used to enlarge the meaning of a term. These are the following:- (1) AIR 1961 Patna 242 - S.M. James and Another v. D. Abdul Khair. (2) 1972 T.L.R. 226 Gujarat - Commissioner of Income-tax v. R.M. Amin. 6. Shri Sundar Rajan then proceeded to the individual appeals, starting with those where the decision was in favour of the Revenue. Appeal No. C.167/82-C. 7. Shri Sundar Rajan referred to the letter dated 29-12-1981 addressed by the Deputy Collector of Customs, Bombay, to M/s. Heeral. That letter reproduced a note by the Deputy Chief Chemist, relating to Microcrystalline Wax. It contained extracts from a book titled "Industrial Waxes" by H. Bennet (this will be referred to later in this order). The note ended with the Deputy Chief Chemist's opinion, which ran as follows:- "Thus, while confirming that microcrystalline wax is derived from the refining of base lubricating oil it is not possible to agree that it is not a product obtained in the refining of crude petroleum. In my opinion, it is covered by item 11 A of CET." The Assistant Collector referred to the test report of the Cust....
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....oils and greases and waxes". Therefore this heading only means waxes of all sorts irrespective of their derivation from refining of crude oil or otherwise are covered under Item 11 A of the CET and specifically mentioned as item 11A(2) of the CET. In view of this, the charging of this product to C.V. duty under item 11 A of the CET by the lower authority appears to be correct and the Assistant Collector appears to have rightly rejected the appellant's claims for refund of duty." Appeal No. C.696/84-C. 10.The Order-in-Appeal was in similar terms to the order in the case of Appeal No. C.452/84-C. (The Order-in-Original was not filed, but was apparently on the same lines as those in the other cases). 11. Shri Sundar Rajan thereafter took up the cases where the decisions of the Collector (Appeals) were against the Revenue. Appeals Nos. C.213/85-C and 214/85-C. 12. The order of the Collector (Appeals) was a combined order disposing of two appeals to him. The appeals were allowed in the following terms:- "At appeal stage, the appellants reiterate their contention stating that waxes covered by CET item 11A(2) are derived directly from crude oil whereas the imported wax in ques....
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....siduary clause". He submitted that this principle applied with full force to the present case where "waxes" were specified in the tariff item and the sub-item thereunder. 16. In the end Shri Sundar Rajan submitted that the four appeals of the Collector should be allowed, and the orders of the Assistant Collector in those cases should be restored; and that the appeals of M/s. Heeral should be rejected. 17. Appearing on behalf of M/s Heeral, Shri Sheth submitted a list of nine points (some of them overlapping) in their favour. It would be convenient to deal with his arguments in the same order. Point No. 1: 18. Shri Sheth submitted that the issue was fully covered by the decision of the Tribunal in the case of M/s. Nav Bharat Enterprises (P) Ltd. (1983 E.L.T. 1134). That case related to liquid paraffin and the items considered were T.I.8., T.I.11 A and T.I.68. It was held that T.I.68 was applicable. The Tribunal had relied on an unreported judgment of the Gujarat High Court in the case of Mehta Bros. v. Superintendent of Central Excise (Special Civil Application No. 1175 of 1970). The Tribunal had also referred to Tariff Advice No. 34/80 dated 26-5-1980 of the Cent....
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....I.11 A as it was not derived directly from the process of refining crude petroleum or shale but manufactured out of petroleum coke which had already met its duty liability. He also referred to the Board's Tariff Advice No. 34/80 holding that liquid paraffin would not fall under T.I.11 A (see para 18 above). Points 6, 7 and 8: 23. Shri Sheth submitted that the suppliers of the goods had certified as follows:- "We hereby certify that Shell microcrystalline wax Imp is manufactured from base stock on (sic) lubricating oil which is derived from crude and not directly from crude oil". M/s. Heeral had furnished a certificate from the Indian Institute of Technology, Bombay, stating that Microcrystalline Wax was not a direct product of the refining of crude oil. This was also confirmed by the extract from book on "Industrial Waxes" by the well-known author H. Bennet. Point No. 9; 24. According to Shri Sheth, M/s. Indian Petro Chemicals Ltd. manufactured polypropylene Waste wax. This had been classified under T.I.68. Classifying their product under T.I.11A would amount to discrimination against them. (It is not necessary for us to discuss this argument, since assessment of differe....
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....e the microcrystalline wax, which cannot be distilled without decomposition, is separated by a complex series of solvent separations from the residue remaining in the still. Paraffin wax, which has very little affinity for oil, is separated from the paraffin wax distillate by cooling and filtering in a common plate and frame filter press where the wax is retained on canvas filter leaves and the distillate oil passes through the canvas and is removed. Oil remaining in the wax filter cake is removed by a sweating process which involves casting of wax in thin sheets and gradually raising the temperature to a point slightly below the melting point of the wax. In this process, the remaining oil runs out of the wax sheet leaving a paraffin wax which usually contains less than 0.5% oil. Microcrystalline wax is present in the residual fraction from the still along with heavy residual lubricating oil and asphalt. Asphalt must be removed from the residue by conventional sulphuric acid treatment or one of the newer selective solvent processes before the wax can be separated. The microcrystalline wax is then removed as crude petrolatum from the residual lubricating oil by any one of several ....
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....ordinarily not fall within it. At the same time it is clear that what comes after the word "including" cannot be read in isolation from what comes before it. Thus, in the cases before us, the term "waxes", read in isolation and in its widest sense, would appear to cover beeswax or sealing wax, neither of which has any relation to crude petroleum. No one would contend that these articles would be covered by Item 11 A. This is because the term "waxes", specific though it is, has to be read in conjunction with the descriptive part of the item and cannot be totally divorced from it. The effect of specifying "waxes" would, according to our understanding, be that, so long as a wax is prima facie covered by the generic description, the presumption would be that it is included within the scope of the item. The burden would be on the person who contends that it is not included, to establish his proposition. In the light of the fact that Microcrystalline Wax is undoubtedly derived (whether directly or indirectly) from refining of crude petroleum, the burden would be on M/s. Heeral in this case to show that it is not one of the "waxes" covered by Item 11 A and by sub-item (2) thereof. 33. Th....
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....14-E or under Item 68, as the case may be, depending upon whether it is a P or P Medicine or not." From this it was implied that the answer to the question posed above was in the affirmative. Here again there was no discussion nor were any reasons given. 37. Shri Sheth had referred to the order of the Tribunal in the case of Nav Bharat Enterprises, wherein the Bench had observed "We agree that a product must be derived from refining of crude petroleum and not be a product obtained by reforming, blending or otherwise treating products derived from the refining of crude petroleum". This case also related to liquid paraffin, which was held to be assessable under Item 8 or under Item 68, as the case might be: in the case before it the correct assessment was considered to be under Item 68. 38. In coming to its conclusion in that case the Tribunal had relied on the Board's tariff advices as well as on an unreported judgment of the Gujarat High Court in the case of Mehta Bros. v. Superintendent of Central Excise (Special Civil Application No. 1175 of 1970). It may be observed that, while tariff advices from the Board would deserve due respect, they would have only persuasive ....
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.... is manufactured, it must bear the charge of excise duty. But when lubricating oil is merely processed and in the process lubricating oil does not lose its character as lubricating oil so that the processed oil is also lubricating oil, there can no charge of excise duty once again. It is the production or manufacture of lubricating oil which attracts the charges of excise duty and not the processing of lubricating oil as such. One may add chemicals to lubricating oil to a process by which its viscosity may be reduced, or enhanced. That would not attract the applicability of item 11 A as long as the lubricating oil retains its character as lubricating oil and does not become as different excisable commodity ..........We are, therefore, of the view that in the present case the processed oil would not be chargeable to excise duty under item 11 A if it can be shown that the mineral oil employed by petitioners as base oil in the process is lubricating oil which has borne excise duty." 42. The Hon'ble High Court next considered another argument advanced on behalf of the Revenue, viz. that the processed oil was a new chemical compound. The Hon'ble High Court went on to observe as fo....
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....ourt allowed the petition. It was declared that the processed oil prepared by the petitioners was not chargeable to excise duty. 43. The above judgment, of the Hon'ble Gujarat High Court was rightly given great weight by our predecessor Bench, as it appeared to be directly relevant to the case before them. However, the judgment makes it clear that there were material differences between the facts in case before the High Court and the facts in the case before us. These are as follows:- (1) In that case, the base lubricating oil which was used for manufacturing the processed oil had already borne duty under Item 11 A. In fact, it was the contention of the petitioners that the processed oil was also a lubricating oil. The observations of the Hon'ble Gujarat High Court reproduced at para 41 above show that they considered that in such a situation duty could not be charged again. In the present case, however, there is no question of duty being chargeable twice. (Although the present appeals relate to the levy of additional duty on imported goods, the basic question is regarding the liability of such goods to excise duty, and the matter would therefore have to be examined as ....
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....ifferent, would not be applicable to the case before us, where the goods under consideration can fairly be described as falling within the scope of "products derived from refining of crude petroleum". Once this description is found to be broadly acceptable, the fact that "waxes" have been specified in Item 11 A would clinch the issue in favour of the inclusion of Microcrystalline Waxes within Item 11 A. 45. We have considered whether by coming to the above conclusion we would be going against the judgment of our predecessor Bench (which incidentally included one of the Members of the present Bench) in the case of Nav Bharat Enterprises. On the face of it such an objection could arise, in view of the observations made by our predecessor Bench in the course of its order (vide para 18 above). The consideration which led that Bench to hold that liquid paraffin was not assessable under Item 11 A, namely, the ruling of the Hon'ble Gujarat High Court and the Board's tariff advices, have been discussed above. It has been pointed out that the observations of the Hon'ble High Court were with reference to a different set of facts and would not be applicable to Microcrystalline Wax. It h....