TMI Blog1998 (4) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... y filed a fresh classification list supported by expert opinion from the head of Chemical Engineering Department IIT (Bombay) and also end-use certificate from M/s. TELCO Ltd., M/s. Bajaj Tempo Ltd. and M/s. Godrej and Boyce Manufacturing Co. Ltd. and M/s. United Motors, in which it is stated that `Indrol TQ is ordinarily used for lubrication. The Assistant Collector on careful consideration of the technical write up of the product held that the product ensures smooth gear changes and as a long service life even when subjected to tough working conditions. Therefore, he held that it is quite clear that, the product is primarily intended to be used for the smooth functioning of the gear s to make it more endure. He held that the lubricating factor is only secondary in nature and hence the product cannot be classified under sub-heading 2710.60, as claimed by them. He also noted that IIT certificate relied by them bears testimum to the fact that the oil is suitable for application on gears and lubrication is mere secondary in nature. Hence he rejected their claim. 3. The learned Collector in the impugned order has examined the technical literature and the expert opinion relied by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... literature suggest clearly that it has other uses as well and, it is more expensive than ordinary lubricating oil. Being a speciality oil, the product is required to be classified only under the residuary entry 2710.99 as `other . 7. The learned Advocate submits that the Tariff sub-heading 2710.60 is not excluded as the entry excludes hydrocarbon oil which has its flash point below 94oC. Even as per the test result, the flash point is above 94oC and hence being a lubricating oil used ordinarily for lubrication in gear box of the automotives, the sub-heading claimed by them is not excluded. He relied on the certificate of Professor M.C. Dwivedi of IIT, Bombay and also the end-use certificates of various companies. He further submitted that the Notification does not cover only to lubricating oils, but it clearly exempts `blended or compounded lubricating oils and greases, that is to say, lubricating oil and greases obtained by straight blending of mineral oils or by blending or compounding of mineral oils with any other ingredients, from whole of the duty of excise leviable thereon under Section 3 of CE S Act, 1944 . He submitted that the Notification itself clarifies that exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my views and orders in the matter are as follows. 11. The relevant tariff headings/sub-headings as they stood during the relevant period read as follows : 27.10 - Petroleum oils and oils obtained from bituminous materials, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations. - Motor spirit, that is to say, any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25 o C, and which, either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines; 2710.60 - Lubricating oil, that is to say, any oil as is ordinarily used for lubrication, excluding any hydrocarbon oil which has its flash point below 94 o C. 2710.99 - Other. 12. The basic issue boils down to determining whether the item was correctly classifiable as l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted that they had initially themselves declared their product as transmission fluid and not as a lubricant or a lubricating oil. The question is whether it was a bona fide error or whether there was no error in reality and the item was really a transmission fluid and not a lubricant or lubricating oil. In this respect, it is observed that the question as to whether it was a speciality oil gains significance. 18. In the hearing before us also, the appellants have themselves mentioned that their product was a `lubricant used for lubrication of gear box and the learned Collector (Appeals) has noted the expert opinion to the effect that its pre-dominant function is the lubrication of gear system. In fact, the pamphlet filed as Exhibit `C describes the product `Indrol TQ as follows :- Indrol TQ A premium quality automatic transmission fluid specially designed to meet the requirements of General Motors specification Type A. It is recommended for automatic transmission and power streerings of automobiles. It ensures gear changes and has a long service life even when subjected to tough working conditions. It is formulated from carefully selected high quality mineral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, Prof. Dwivedi s conclusion that in view of the above factors, the product is gear `lubricating oil is not acceptable. For central excise purposes, we are governed by our tariff and are required to be guided by the HSN which distinguishes between lubricating oil and lubricant. The fact that some of their customers also use it as a lubricant is significant although it is possible that users may or may not be concerned with the difference and so may not distinguish between lubricating oils and other lubricants whereas for excise purposes, this distinction is important. It is also significant that the Expert Prof. Dwivedi has also indicated that in view of physico-chemical characteristics and additive package, an oil would be suitable for light duty gear box and power transmission applications. Therefore, his description as `transmission fluid was quite apt and I do not know why the appellants are interested in resciling from this position. The chemical test report of the Department is not of much use as it does not answer the basic question whether the sample is a preparation of petroleum oils or oils obtained from bituminous materials other than crude, on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not indicated as to whether all the ingredients of the aforesaid notification and the parameters laid down have been duly satisfied. As he has not given reasons for his conclusions, the Collector s order insofar as the aspect of notification is concerned, is a non-speaking order. 24. The officers have also not taken note of the Board s Letter No. 89/1/73-CX dated 23-8-1978 about speciality oils in which it is mentioned, inter alia, that Speciality oils are generally treated as non-lubricants. Their primary function is other than lubrication and their lubricating function, if any, is only secondary. In other words, whereas the A.C. has not duly considered Notification No. 120/84 (as amended) and not given reasons for considering the product as speciality oil in spite of its lubricating properties, the Collector has not considered Notification No. 287/88 (without assigning any reasons for the same) and passed orders without indicating how the parameters of 120/84 (as amended) were satisfied. 25. In view of the above position, the impugned orders are required to be set aside and the matter is required to be remanded for re-consideration of the matter in the light of abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is correctly classifiable under Chapter Heading 2710.60 read with Notification No. 120/84 dated 11-5-1984 attracting `nil rate of duty. He has further opined that the essential and pre-dominant function of the product in question is lubrication of synchromesh gear box systems in the motor vehicles. 31. The relevant Tariff Entries 2710.60 and 2710.99 read as under :- 2710.60 - Lubricating oil, that is to say, any oil as is ordinarily used for lubrication, excluding any hydrocarbon oil which has its flash point below 94 o C. 2710.99 - Other. 32. The tariff entries exclude hydrocarbon oil which has its flash point below 94oC. According to the department, oil in question is a speciality oil and hence it would not be included in this sub-heading. But on seeing the tariff entry, heading covers lubricating oil. Merely because the lubricating oil has been blended with other compounds to make it more suitable for lubricating purpose in the gear box power transmission and other triviological function by itself will not exclude the item as a lubricating oil as it was correctly analys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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