AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 1038
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....nd Rs. 32,93,415/- (Total Rs. 6,65,50,096/-) 01.03.2000 to 31.03.2010 E/21890/2015 OIA No. TVM-EXCUS-000-APP-037-15-16 dated 14.05.2015 passed by the CCE(Appeals), Cochin, Held that duty was payable on re-processing of waste oil from 01.03.2000 onwards General Order and No demand of Excise duty. E/21902/2015 OIA No. TVM-EXCUS-000-APP-65-15-16 dated 29.05.2015 passed by the CCE (Appeals), Cochin. (arising from OIO No. 01/2013 CX (ADC) dated 08.02.2013) Rs. 21,63,000/- Denial of SSI exemption on the ground that the aggregate value of clearances during 2010-11 exceeded Rs. 150 Lakhs 04/2011 to 03/2012 2. The Order-in-Original No.1 & 2/2011-CX (COMMR.) dated 31.10.2011 is the de novo order based on the directions of the CESTAT, Bangalore vide Final Order No. 1296/09 dated 28.10.2009. The other one is the Order-in-Appeal No.TVM-EXCUS-000-APP-037-15-16 dated 14.05.2015. Both these orders deal with the issue whether the activity undertaken by the appellant to convert the waste oils which is neither fit for use nor marketable as the primary product into....
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....eals) vide Order-in-Appeal No.17/2001-CE dated 19.01.2001. This order was challenged in Writ Petition No. 6138/2001-E before the Hon'ble High Court of Kerala and a stay was granted vide Order dated 23.02.2001. Simultaneously, an appeal was filed with the Tribunal against the same Order-in-Appeal dated 19.01.2001. The Hon'ble High Court of Kerala in Final Order dated 09.02.2009 held that the constitutional validity of the Chapter Note could not be challenged and directed the Tribunal to dispose of the appeal filed by the applicants within 3 months from the date of the judgement. Thereafter, the Tribunal vide Final Order No. 1296/09 dated 28.10.2009 set aside the Order-in-appeal and remanded the matter to the original authority to reconsider the issue afresh and pass a speaking order. Based on these directions, the original authority vide Denovo Order No.4/CE/2010 held that the appellants are liable to pay Central Excise duty on the entire quantity of reprocessed lubricating oils manufactured and cleared from their factory from 01.03.2000 onwards which was upheld by the Commissioner (Appeals) against which Appeal No. E/21890/2015 is filed. The learned counsel submits that Appeal numb....
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.... viscosities and fuel grade oil were cleared as under: base oil-light - as rubber processing oil in bulk, base oil - heavy-blended with additives and chemicals, pattern barrels and smaller packs and sold for use as lubricating oil under DUROL brand name base oil - medium-as processed base oil, mineral oil, general purpose oil, etc; in bulk  fuel grade oil cleared in bulk 4.4 It is further submitted that the authorities have completely misconstrued the processes undertaken the nature of the products sold/cleared. Waste oil has been defined in Chapter Note 3 to Chapter 27 and is classifiable under chapter heading 2710 2000, 2710 9100, 2710 9900 while lubricating oil which is classified under Chapter Heading 27101980 as per the Chapter Note 9/4 of Chapter 27 of CETA 1985. It is settled law that the process of removing impurities and contaminants in the waste oils and their segregation to base oils/ reprocessed oils of different viscosities does not amount to manufacture in terms of Section 2(f) of the Central Excise Act 1944 read with Chapter Note 9/4 under Chapter 27 as the chapter Note 9/4 is in relation to lubricating oils and lubricating prepa....
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....e learned counsel submits that with regard to Appeal No. E/21902/2015, the authorities have included clearances of all goods on the following grounds: a. reprocessed base oil pack and sold in bulk for use as lubricating oils cleared on payment of duty after crossing the exemption limits b. other reprocessed oils which are cleared in bulk without payment of duty for computation of the aggregate value of clearances during 2010 to 2011 The learned counsel submits that in view of the fact that the processes undertaken by the appellant does not amount to manufacture, there is no manufacturing of excisable goods attracting levy of excise duty and therefore, the question of including the value of clearances does not arise. 5. The Authorised Representative (AR) has submitted that the various treatments in the process of removal of impurities resulted in a completely separate distinct and identifiable product different from the input material which is marketable; hence, as held by the authorities, the product is marketable and leviable to excise duty. He also submits that since there was a stay from the High Court, the show-cause notice dated 04.06.2010 for the perio....
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....sideration the definition of 'manufacture' under Section 2(f)(iii) read with Chapter Note 9 to Chapter 27, the Commissioner concluded that the processes adopted by the appellant amounts to manufacture. Note 9 to Chapter 27 is only with reference to lubricating oils and lubricating preparation under Chapter Heading 2710 1980 which is clearly distinguishable from waste oil which falls under Chapter Heading 2710 and is defined as 'containing mainly petroleum oils and such oils no longer fit for use as a primary product'. 6.2 There is no dispute that the appellant procures waste oils form various sources and after processing them clears as reprocessing base oil and therefore, the application of Section 2(f) read with Note 9 of Chapter 27 itself is misplaced and misconstrued. This is also clarified by CBEC in its Circular No.1024/12/2016-CX dated 11.04.2016 which is reproduced below: Circular No. 1024/12/2016-CX dated 11.04.2016 To All Principal Chief Commissioner / Chief Commissioners of Customs, Central Excise& Service Tax; All Director Generals of Customs, Central Excise & Service Tax; All Principal Commissioners/ Commissioners of Customs, Central Excise....
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....Waste oil is classifiable in either of them depending upon its composition. Lubricating oil on the other hand is classifiable under CETH 27101980, a heading specifically covering lubricating oil. 3. It may be noted that used lubricating oil collected from service stations is not fit for use as primary products and will therefore be classified as waste oil whereas processed waste oil, which becomes fit for use as lubricating oil and would qualify as primary product, will be classified as lubricating oil. Manufacture 4. Waste oil after processing may become lubricating oil but this process would not amount to manufacture in view of the judgement of tribunal in case of Collector vs Mineral Oil Corporation [1999(114) ELT 166] upheld by Hon'ble Supreme Court [2002(140) ELT 248(SC)]. However, the issue also needs to be examined in light of chapter note 4 of chapter 27 which was inserted in the Central Excise Tariff by the Finance Act of 2000. 5.1 Chapter note 4 of chapter 27 is a deeming fiction on manufacture and provides that:- "In relation to the lubricating oils and lubricating preparations of heading 2710, labelling or re-labelling of containers a....
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.... Commissioner of C. Ex. Kanpur (Supra) the Tribunal in similar set of facts as is in the present case has held that "both before and after the processing the product is only transformer oil. That being so it cannot be said that a new and distinct commodity has come into existence consequent to the process under taken by the appellants." This view was upheld by the Supreme Court and accepted by the CBEC as is evident from the Circular referred above. 7.3 In the case of CEE JEE Lubricants Vs. Commissioner of Central Excise & Customs, Cochin (Supra) wherein it is held that "We have considered the submissions made at length by both sides and peruse the records, it is undisputed that the appellant procured used oil from different sources. The processing under taken by the appellant is in form of Vacuum distillation, Centrifuging removal of moisture, carbon and other impurities. The entire tenor of the adjudicating authority while confirming the demand is only on the ground that the used oil was unfit for use as lubricating oils were made fit for the use by the appellant by refining or re-processing the same and hence, characteristic and the use has changed. Due to which Chapter Note ....