2009 (10) TMI 337 - AT - Central Excise

Manufacture- The relevant facts that arise for consideration are that Revenue was of the view that the process of re-refining undertaken by M/s. CJL amounts to manufacture and the re-refined lubricating oils are classifiable and chargeable to duty under Chapter Heading 27101980 of Central Excise Tariff Act 1985 hence issued a Show Cause Notice under Section 11A of Central Excise Act 1944 demanding duties. On adjudication the item was adjudged as dutiable vide Order-in-Original passed by the Commissioner of Central Excise Cochin-18. Consequently in the financial year 2006-07 the value of clearances needs to be included in the gross value and vide O-I-O dated 16-2-2009 confirmed the demand denying SSI exemption to appellant. In the light of the decision of Mineral Oil Corporation v. CCE Kanpur held that- impugned orders are unsustainable and are liable to be set aside and we do so. The impugned orders are set aside and the appeals are allowed with consequential relief if any.

Summary

Issues:
1. Waiver of pre-deposit of confirmed amounts by Adjudicating Authority.
2. Classification and chargeability of re-refined lubricating oils under the Central Excise Tariff Act, 1985.
3. Denial of SSI exemption to the appellant for clearances in the financial year 2006-07.

Analysis:
1. The stay petition sought the waiver of pre-deposit of confirmed amounts by the Adjudicating Authority. The Tribunal accepted the request due to an identical issue listed for final disposal, waiving the condition and taking up the appeal for disposal alongside another appeal. This decision was made by Members M.V. Ravindran and P. Karthikeyan.

2. The issue revolved around whether the re-refining process undertaken by the appellant amounts to manufacture and if re-refined lubricating oils are classifiable and chargeable to duty under Chapter Heading 27101980 of the Central Excise Tariff Act, 1985. The Revenue issued a Show Cause Notice demanding duties, which was confirmed by the Adjudicating Authority. The appellant argued that the refining process did not change the essential characteristics of the oils, citing relevant tribunal decisions supporting their stance. The Tribunal, after considering submissions from both sides and perusing records, found that the appellant's processing rendered the used oil fit for use as lubricating oils, changing its characteristics and use, thereby attracting Chapter Note 4 of Chapter 27. However, the Tribunal referenced a previous decision where a similar process was not considered as manufacture, leading to the setting aside of the impugned orders and allowing the appeals.

3. The denial of SSI exemption to the appellant for clearances in the financial year 2006-07 was based on the confirmation of demand by the Adjudicating Authority. The appellant argued for setting aside both Orders-in-Original, emphasizing that the refining process did not amount to manufacture. The JCDR contended that the reprocessing of waste oil made the product marketable to consumers, falling under Chapter Note 4 of Chapter 27. The Tribunal, after considering the arguments and previous decisions, concluded that the impugned orders were unsustainable and set them aside, allowing the appeals with consequential relief, if any. The operative portion of this order was pronounced in open court at the conclusion of the hearing.