TMI Blog2022 (8) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... e, characteristic and the use has changed. Due to which Chapter Note No. 4 of Chapter 27 gets attracted and the said activity becomes manufacture. It is observed 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 UNION OF INDIA VERSUS DELHI CLOTH AND GENERAL MILLS CO. LTD. [ 1962 (10) TMI 1 - SUPREME COURT] , 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 no longer be regarded as the original commodity but is recognized in trade as a new and distinct commodity. In the present case, the appellant bring used waste oil /sludge oil and by removing impurities, it is made again useable as oil. Both before and after the processing, the product remains as only oil. That being so, it cannot be said that a new and distinct commodity has come into existence cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led 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and during the search proceedings, samples of finished products viz., Recycle Waste Oil and Re-refined Used Oil were withdrawn and same were sent for testing to the Chemical Examiner, Central Excise Customs Laboratory, Vadodara.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 liable to discharge the Central Excise duty. Accordingly, a show cause notice dated 05.07.2016 was issued to the appellants, inter alia, proposing demand of Central Excise duty with interest and also imposition of penalty under Section 11AC of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Oils of CETH 27101980. As per the Show Cause Notice the recycled waste oil/sludge/used oil are classifiable under CETH 27101990, to which the said Note 4 does not apply as per the said CBEC Circular. 3.4 On limitation he submits that over the years, there has been correspondence addressed by Central Excise to Customs about receipts of said Waste Oil/ Sludge in the premises of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing 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 no longer be regarded as the original commodity but is recognized in trade as a new and distinct commodity. In the present case, the appellant bring used waste oil /sludge oil and by removing impurities, it is made again useable as oil. Both before and after the processing, the product remains as only oil. That being so, it cannot be said that a new and distinct commodity has come into existence consequent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uging 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 after clearing remains mobil oil with no change in form, nature and characteristic - Mobil oil obtained as a result of cleaning process not a manufactured product and not liable to sales tax. Accordingly, respectfully following the said decisions, we are of the considered view that the impugned orders are unsustainable. 5.6 We also find that for applying the said Chapter Note 4 to any goods for examining, whether, manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 oil and sludge should not be made amounts to manufacture and should not be liable to duty. 5.8 Based on the above discussion, Circular dated 11-4-2016 and following the above rulings of higher judicial fora it can be held that the process of cleaning of waste oil to yield reclaimed fuel oil does not amount to manufacture as defined under Section 2(f) of the Central Excise Act, 1944. Once it is held that the activity is not m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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