TaxTMI 
TaxTMI 
2022 (8) TMI 163
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.... processes like vacuum distillation, filtration, heating and centrifuging and other process to produce Re-usable Fuel Oil and Re-refined used oil. The Fuel oil so produced by Appellant is being sold to traders and consumers in open market as Re- Cycled Fuel Oil /Re-Cycled Industrial Fuel Oil and Re-refined Lube Oil without payment of Central Excise Duty. Appellant's unit was visited by the officers and during the search proceedings, samples of finished products viz., Recycle Waste Oil and Re-refined Used Oil were withdrawn and same were sent for testing to the Chemical Examiner, Central Excise & Customs Laboratory, Vadodara. In his Test Reports, the Chemical Examiner has categorically stated that the samples of Recycled Waste Oil meet the parameter of Fuel Oil as prescribed under IS "1953". Similarly, in case of sample of Refined Used Oil, the same confirms to the parameters of Lubricating Oil. Statement of Shri Manish C. Patel, Director of Appellant was also recorded by the department. According to department, Appellant's processes amounts to manufacture and the recycled fuel oil is appeared to be classifiable under Central Excise Tariff Heading No. 27101990 and Appellant is liabl....
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....nvoked the said Note -4 nor is it an allegation in the show cause notice that the terms of the said Note -4 are satisfied and attracted in the present case. Therefore, by relying on the said Note 4, the Commissioner has traversed beyond the Show Cause Notice and on this ground itself the Commissioner's order is liable to be set aside. He placed reliance on the following judgments. • CCE Vs. Ballarpur Industries Ltd. - 2007 (215) ELT 489 (SC) • CCE Vs. Gas Authority of India Ltd. - 2008 (232) ELT 7(SC) • Commissioner Vs. Reliance Ports and Terminals Ltd. -2016 (334) ELT 630 (Guj.) 3.3 Without prejudice he also submits that the said Note 4 applies is case of processes mentioned therein, undertaken in relation to lubricating oils and Lubricating preparations. The Appellant has not undertaken any such process and that too in relation to Lubricating Oils and Lubricating preparations. The Circular No. 1024/12/2016 clarifies that Note 4 is not applicable to the waste Oil. In the present case, it is not the case in the show cause notice that the waste oil/sludge and used oil or the recycled waste oil/sludge and recycled used oil are Lubricating Oil....
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....ge oil. For removing impurities from said waste oil Appellant undertake various processes. The processing undertaken by the appellant is inform of filtering distillation, dehydration, centrifuging etc. The entire tenor of the Adjudicating Authority while confirming the demands is only on the ground that the used oil which was unfit for use as fuel Oil were made fit for use by the appellant by refining or reprocessing the same and hence, characteristic and the use has changed. Due to which Chapter Note No. 4 of Chapter 27 gets attracted and the said activity becomes manufacture. We observe that the purifying of the sludge/used oil would not amount to manufacture. Manufacture implies a change, but every change is not manufacture. The Apex Court in the landmark decision in the case of U.O.I. v. Delhi Cloth and General Mills Co. Ltd.-1977(1)E.L.T.(J199), held that "The word 'manufacture' used as a verb is generally understood to mean as 'bringing into existence a new substance,' however, minor in consequence the change may be." The true test for determining whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can ....
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....ion has been upheld by the Hon'ble Supreme Court by dismissing the Civil Appeal filed by the Revenue as reported at 2002 (140) E.L.T. A248 (S.C). 5.4 We also rely on the Tribunal Bangalore ruling in the case of Cee Jee Lubricants v. CCE, Cochin [2010 (251) E.L.T. 439 (Tri.-Bang.)] wherein it was clearly held that Manufacture - Refining the used/waste oil procured from market, in the form of vacuum distillation, centrifuging and removal of moisture, carbon and other impurities, does not amount to manufacture - Section 2(f) of Central Excise Act, 1944 - Chapter 27 of Central Excise Tariff. 5.5 In the matter of Universal Viscose Oil Products Vs. Commissioner of Trade of Tax, U.P.- 2010 (258) E.L.T. 22 (All.) the Hon'ble High Court of Allahabad held as under: - "Manufacture - Cleaning of used oil - Used mobil oil purchased from unregistered dealer and impurities removed after cleaning process and cleaned oil sold - Used mobil oil whether undergoing change in character after cleaning - No new commercial commodity comes into being by cleaning process - Used mobil oil with impurities not consumed in manufacturing process and new product not emerges - Mobil oil before and af....
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....ted in Chapter Note 4 of Chapter 27. The circular specifically talks about the lubricating oil obtained from re-refining or re-processing waste oils and other oils obtained from various sources. In the instant case the product was not lubricating oil falling under the 2710 19 80 but is reclaimed fuel oil falling under 2710 99 00. The circular also states that the chapter note applies only to "lubricating oils and lubricating preparations of Heading 2710". Other goods falling under CETH 2710 are not covered by the chapter note as the same is reclaimed fuel oil obtained from waste oils. The deeming fiction provides that when one of the process listed in the chapter note is carried out on lubricating oil or lubricating preparations, it shall be deemed to be manufacture. The instant case is the reclaimed fuel oil which is also waste oil falling under 2710 99 00 but used as fuel only and is not a lubricating oil or used as lubricating oil. It is also worthwhile that similar to chapter note 4 for Lubricating oil and preparations there is no such chapter note for the product of the appellant in question. This also suggest that legislators are very conscious that recycled oil from waste oi....