TaxTMI 
TaxTMI 
1999 (8) TMI 466
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....5084/93 (a) 29-1-1992 1-8-1991 to 31-12-1991 Rs. 20,46,994.23 Nil (b) 3-8-1992 1-1-1992 to 29-2-1992 Rs. 10,77,390.00 Nil (c) 1-10-1992 1-3-1992 to 31-8-1992 Rs. 19,96,362.88 Nil (d) 25-2-1993 1-9-1992 to 31-1-1993 Rs. 19,83,411.76 Nil Rs. 71,04,159.47 (2) E/R-349/96 28-1-1994 7-1-1989 to 31-7-1991 Rs. 47,59,343.40 Rs. 30.00 lakhs 3. Brief facts of the cases are as under : - 3.1 The appellants are engaged, inter alia, in the manufacture of blended or compounded lubricating oils. They also process a product called 'Super TT' which the appellants claim to be a blended lubricating oil ordinarily used for lubrication. The undisputed process of manufacture of the said product as given by the appellant firm in their appeal memos, is as under :- 'Base Oils are taken to the blending kettle, heated to remove moisture. Additives are added and mixed well. Temperature reduced and MTO and green dye added and mixed well, to get the final product.' 3.2 As admittedly, the flash point of the 'S....
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....C was duly declared by them. The classification was approved and the benefit of Notification was extended to them after making necessary enquiries etc. In the circumstances, it cannot be said that they had suppressed or mis-declared any facts from the Department justifying invoking of larger period of limitation. He submitted that the demand in Appeal No. E/R-349/96 was wholly barred by limitation as the entire period covered is beyond the normal period of limitation of six months whereas in Appeal No. E (SB) 5084/93, a part of the demand would be beyond the limitation period. 5. As regards the merits of the case, the learned Advocate argued that admittedly, they are manufacturing lubricating oils. Their product is known in the market as lubricating oil and is actively recommended by the manufacturers of two wheelers like TVS Suzuki etc. for lubrication purposes. He drew the attention of the Bench to the Dealer's Certificate and the End-Use Certificates issued by the two wheelers manufacturers in support of his submissions that the product is used for lubrication by mixing the same with petrol and is known in the market as lubricating oil. The product is containing petroleu....
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.... opining that the product is not falling under exemption under Notification No. 120/84-C.E., the Chief Chemist has exceeded his jurisdiction. Arguing on the evidentiary value of the Chief Chemist's Report, he made a reference to Gujarat High Court decision in the case of Stadfast Paper Mills v. D.R. Kholi & Others reported in 1983 E.L.T. 744 (Guj.) wherein it was held that the report of the Chief Chemist must be confined to the supply of data obtained by him through chemical analysis and it is not his function to give an opinion as to the classification of the product. He submitted that the Board's Circular F. No. 88/2/91-CX-3, dated 9-4-1993 only excludes the lubricating preparations falling under Heading 3403 from the scope of Notification No. 120/84-C.E. and is silent about the entitlement of benefit of lubricating oils falling under sub-heading 2710.99. In any case, these Circulars are not binding in character, submitted Shri Cama and relied upon Supreme Court's decision in the case of Bengal Iron Corporation v. Commercial Tax Officer reported in 1993 (66) E.L.T. 13 (S.C.). He submitted that as laid down by the Hon'ble Supreme Court in the case of Delhi Cloth & General Mills Co....
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....ence of double dash in contradistinction to the other sub-headings indicates that there is no other sub-heading dealing with lubricating oils. Referring to the description given against sub-heading 2710.60, he emphasised on the words - 'that is to say' - in support of his submission that only lubricating oils having flash points above 94oC are lubricating oils. He also referred to Tribunal's decision in the case of Collector of Central Excise v. I.P.C.L. reported in 1990 (46) E.L.T. 173. As regards the common parlance Test, he argued that when there is a clear and unambiguous definition in the Tariff heading, the same has to be given preference. He placed reliance on the Supreme Court's decision in the case of Collector of Central Excise, Hyderabad v. Fenoplast (P) Limited, which is reported in 1994 (72) E.L.T. 513 (S.C.) and in the case of Electronic Components Industries v. C.C., Cal. reported in 1997 (92) E.L.T. 511 (Tribunal). He argued that the appellants' product might be known as lubricating oil in the market, but if the same does not conform to the definition as given in the Tariff, the same cannot be considered as lubricating oil and the benefit of the Notification cannot ....
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....es are produced out of such mineral oils on which appropriate duty of excise leviable under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) or the additional duty of Customs leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), has been paid. Explanation. - For the purposes of this notification, all stocks of mineral oils obtained by a manufacturer for producing lubricating oil and greases, except such stocks as are clearly recognisable as being non-duty paid, shall be deemed to have discharged appropriate duty of excise leviable under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) or the additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975). [Notification No. 120/84-C.E., dated 11-5-1984 as amended by Notifications No. 78/86-C.E., dated 10-2-1986; No. 256/88-C.E., dated 30-9-1988; and No. 94/89-C.E., dated 1-3-1989]" 9. A reading of the Notification shows that there is no mention of Tariff heading in the said Notification. The exemption has been granted to lubricating oil simpliciter. Now the question arises as to whether the description given against sub-heading 2710.60 can ....
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....oil for mixing the same along with the petrol. Further, the pamphlets issued by the appellants in the shape of advertisement as well as by the other reputed manufacturers of Two Wheelers like TVS, Suzuki etc., make it evident that the appellants' product is being marketed by them as a lubricating oil and is being treated by the various persons who use the same as lubricating oil. The other manufacturers of similar products, like Bharat Petroleum Corporation Ltd. and Castrol Oil Co. Ltd. have also certified that they are availing the benefit of the self-same exemption Notification for their similar product. In our views, the market parlance and how a product is known and traded in the markets is an important criteria for classification of the product, as laid down in the several authorative judgments. All the above materials clearly establish that the product 'Super TT', is nothing but lubricating oil. It may not be classified under sub-heading 2710.60 because of it flash point being below 94oC. That is why, the same has been classified as others under Heading 2710.99. It is not that only Oils having flash point will be above 94oC and would be considered as lubricating oil and the r....
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....he benefit to the lubricating preparations of Heading 3403.00. Lubricating Oil classifiable under Heading 2710.99 was neither an issue nor was the same considered. We also find that the definition of lubricating oil extracted from Hawley's Condensed Chemical Dictionary, 11th Edition, and mentioned in the report, favours the appellantsinasmuch as no flash point has been mentioned therein. The said Report is being reproduced for better appreciation of facts :- "The point at issue in the file is whether blended/compounded lubricating oils and greases falling under Chapter 34.03 are covered by the Notification No. 120/84-C.E. The Notification No. 120/84 exempts blended or compounded lubricating oils and greases, i.e. to qualify for this Notification the product should primarily be a lubricating oil or lubricating grease. Lubricating oil is defined in the technical books as under :- IS: 4639-1968. Oil usually refined primarily intended to reduce friction between moving surfaces. Lubricating oil (Lube oil) - A selected fraction of refined mineral oil used for lubrication of moving surfaces, usually metallic and ranging from small precision machinery (watches) to the hea....
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....es appear before these different sub-headings of the main heading. We find that the words - 'that is to say' - are missing in sub-heading 2710.60 indicating thereby that no main definition of lubricating oil has been given in the Tariff which can, further, be sub-divided into different sub-headings depending upon the flash points. Accordingly, we do not find any merit in this contention of the Revenue. 16. We may observe here that though it is a settled principle of law that in a fiscal provision, the benefit of exemption should be construed strictly as laid down by the Honourable Supreme Court in the case of M/s. Swadeshi Polytex Ltd. v. Collector of Central Excise reported in 1989 (44) E.L.T. 794(SC), the strictness of construction of exemption that Notification dues not mean that the full effect in the exemption notification should not be given by an circuitous process of interpretation. The two criteria required for extending the benefit of Notification No. 120/84 , stand fully satisfied by the appellants. We also find that on the same fulfilment of conditions, the benefit of the Notification is being allowed by the Department to the other similarly situated unit and in....
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....months has also been set aside. Respectfully following this decision, we hold that the entire demand is barred and set aside the same. 19.  As regards the imposition of penalty of Rs. 30.00 lakhs in Appeal No. E/RR-349/96, we find that in view of our discussions above and in view of the facts and circumstances of the case, the same is not sustainable. Accordingly, the same is set aside. Resultantly, all the appeals are allowed with consequential reliefs to the appellants, if any. Sd/- Archana Wadhwa Member (J) 20. [Order per : P.C. Jain (Contra)]. -I have perused the order proposed by the ld Sister, Mrs. Archana Wadhwa, Judicial Member, I propose to write a separate order. 20.1 Main question before us is whether "Lubricating Oils" having flash point below 94oC, manufactured by the appellants is covered by Notification 120/84-C.E. (as amended) during the collective period 7-1-1989 to 31-1-1993 covered by different show- cause notice involved in these appeals. Contention of the Revenue is simple. According to it, "lubricating Oils" have been defined in the C.E. Tariff sub- heading 2710.60. Therefore, lubricating oils referred to in Notifi....
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....venue is based on sound principles. There cannot be two opinions that "Lubricating Oils" has been defined in a particular manner under sub-heading 2710.60. This is apparent by use of the expression "that is to say" in that sub-heading (2710.60). A similar scheme has been adopted in other sub-headings of Heading 27.10 by defining some other petroleum oils, namely, 'motor spirit' with sub-headings of its different varieties 2710.11 to 2710.19; Kerosene and aviation turbine fuel (sub-heading 2710.21 to 29); refined diesel oil (sub-headings 2710.31 to 2710.34); Diesel oil (2710.40); furnace oil (2710.50). 21.2 I am, therefore, of the view that when any notification exempting any product falling under this chapter uses any of the above expressions, it would have the same meaning, unless the context otherwise means differently, as given in the above various sub-heading for various mineral Oils. For example, a notification [No. 179/73-C.X. (as amended)] uses various expressions, motor spirit Kerosene, R.D.O. or Dio (n.o.s) which is laying down the limits for drawal of duty free samples. It will be difficult to argue with any conviction that those expression should be understood as....
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....b-heading 2710.99 but such a classification will not make the Notification 120/84-C.E. applicable to the product under consideration. This is for the reason that for the purpose of C.E Tariff and exemption Notification 120/84-C.E., such lubricating oils having flash point below 94oC cease to be "lubricating oil" but acquire the general and nameless description 'others' under sub- heading 2710.99. 21.4 As regards a submission of the ld. Advocate that in other commissionerates of Central Excise, similar oil is being extended the benefit of Notification 120/84-C.E. this in our view, is not of consequence, even if it is true, for the reason that this Tribunal is not competent to look into allegations of discrimination in assessments made by one quasi-judicial officer and that by another. In my views, it is but inevitable in the system of judicial process obtaining in this contry under the prevalent laws. Consequently, I hold that benefit of Notification 120/84- C.E.C. will not be available to the super TT oil because of having flash point below 94oC. Next is the question of limitation:(i) whether limitation of five years under Section 11A would apply as has been made appl....
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..../96 is set aside as barred by time. 21.7 A plea has been made that the show-cause notices should be made effective prospectively and even six months time-limit should not be allowed for recovery. Reliance has been placed on Apex Courts judgment in the case of Bhiwani Textile Mills- [1996(88) E.L.T.639 (S.C.)]. As against the aforesaid plea, ld. SDR has relied on Apex Court's another judgment in Ballarpur Industries Ltd. - [1995 (76) E.L.T .499(S.C.)]. He further submits that Ballarpur (supra) clearly holds that S.11A can apply only to past recoveries. To make the s.c.n. prospective will be to make the provision of S.11A superfluous. I have carefully considered those pleas. Factual position in Bhawani Textiles was completely different. It has been held by another Bench of the Tribunal in Gujrat State Fertiliser Co. Ltd. v. C.C.E. - [l997(72) ECR 852] that Ballarpur Industries is to be preferred over Bhiwani Textiles inasmuch as that Ballarpur judgment has been delivered by three ld. judges of the Apex Court as against the two ld judges of that court in Bhiwani. Further Bhiwani did not notice Ballarpur. 22. Apart from the foregoing distinction, I also note that Bhiwan....
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....e date of filing R.T. 12 return, or (ii) Last date of filing R.T. 12 return, where no such return has been filed but was required to be filed, or (iii) Te date of payment of duty, if (i) or (ii) above in that order is not applicable, as held by Technical Member. 25. The matter relates to the benefit of exemption under Notification No. 120/84-C.E., dated 11-5-1984 (as amended) to the product named Super T.T. having a flash point below 94oC, classified under sub-heading no. 2710.99 of the Central Excise Tariff. The product Super T.T. is mixed in the petrol while filling the petrol tank of the two wheeler. The Member (J) while observing that the product in question was not classifiable under sub-heading no. 2710.60 because of its flash point being below 94°C, proposed that as Notification No. 120/84-C.E. did not make any reference to the heading number and extended the benefit to lubricating oils irrespective of their flash point, the appellants were entitled to the benefit of the said exemption notification. The Member (T) now Vice-President after referring to the definition of lubricating oil as contained in sub-heading no. 2710.60 observed that the expression "lub....
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....t Bengal, 1997 (91) E.L.T. 529 (SC) - meaning of the word given in the exemption notification is to be gathered from the relevant tariff description/definition given in the relevant Tariff item. (5) Gurjarat State Fertilizers Co. Ltd. v. C.C.E., Bombay, 1997 (23) R.L.T. 126 (T) - revision of the approved assessable value is enforceable for six months prior to the date of show cause notice and not prospectively from the date of notice. 28. I have carefully considered the matter. M/s. Castrol India Ltd. were engaged in the manufacture of two stroke engine oil which they called Castrol Super T.T. In the process of manufacture of Super T.T. base oils were taken to the blending kettle, heated to remove moisture; additives were added and mixed well; temperature was reduced and green dye added and mixed well to get the final product. The flash point of the Super T.T. was below 94oC. The flash point is the minimum temperature to which an oil must be heated so that it gives enough vapour which can form a flammable mixture with air under the condition of test. Flash point is required to be determined in accordance with the tests prescribed in this behalf in the Rules made under th....
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....dictionary meaning of those goods. The definition may extend the area normally covered by such goods or it may curtail the common meaning of the product. In the field of taxation, the legislature had a wider discretion in classifying items for tax purposes or for defining the product for classification under one or the other heading in the Tariff. Any reasonable definition having nexus with the scheme of the Tariff could not be assailed on the ground that it had extended or curtailed the commercial understanding of the dictionary meaning or the product. It is an admitted fact that the flash point of the Super T.T. was below 94oC. It was thus not covered by the definition of lubricating oil as appearing in sub-heading no. 2710.60. 31. Under Notification No. 120/84-C.E., dated 11-5-1984 (as amended), blended or compounded lubricating oil and greases, that is to say, lubricating oils and greases obtained by straight blending of mineral oils or by blending or compounding of mineral oils with any other ingredients, subject to certain conditions as provided in that notification were eligible for exemption from the payment of central excise duty. A restricted meaning has bee....