2001 (10) TMI 535 - AT - Central Excise

Summary

Issues Involved:
Classification of lubricating oils under Central Excise Rules, mis-declaration of products, exemption under Notification No. 120/84, duty demand, penalty imposition, interpretation of tariff headings, application of Section 11A, eligibility of Notification 120/84.

Classification of Lubricating Oils:
The case involved a dispute over the classification of lubricating oils by M/s. Bharat Petroleum Corporation Limited under Central Excise Rules. The products were initially approved under Tariff Item No. 2710.99 instead of 2710.60, despite claiming exemption under Notification No. 120/84. The Assistant Commissioner approved the classification lists, but a show-cause notice was issued alleging mis-declaration and improper availing of duty exemption.

Mis-Declaration and Exemption:
The show-cause notice accused the appellants of mis-declaring products as "Blended and Compounded Lubricating Oils" to avail of duty exemption under Notification No. 120/84. The Department alleged that the products were raw materials for lubricants, not finished oils. The duty demand of Rs. 3.98 crores and a penalty of Rs. 40 lakhs were imposed, which the appellants contested.

Interpretation of Tariff Headings:
The Tribunal analyzed the tariff headings 2710.60 and 2710.99 concerning lubricants and greases. It was argued that the products met the criteria for classification under 2710.60 based on their flash point and usage for lubrication. The Tribunal noted the absence of a definition for "lubricating oil" in the Central Excise Tariff and emphasized the importance of flash point conditions for classification.

Application of Section 11A and Notification Eligibility:
The Tribunal scrutinized the application of Section 11A regarding the longer period of demand and the eligibility of Notification 120/84. It was observed that the classification issue was not under consideration, focusing solely on the notification's applicability. The Tribunal highlighted the lack of evidence supporting the invocation of Section 11A and the proper officer's approval of the classification list.

Referral to Larger Bench:
In the absence of a clear definition of "lubricating oil" in the Central Excise Tariff, the Tribunal referred the matter to a Larger Bench to determine the exact scope of coverage under Notification 120/84. The decision in Castrol India Limited v. Commissioner of Central Excise was cited, emphasizing the need for a comprehensive interpretation of the notification.

Final Decision:
The Tribunal set aside the demand for the period preceding six months from the show-cause notice issuance. The matter within six months was referred to a Larger Bench for a decision on the eligibility of Notification 120/84-C.E., highlighting the complexity and significance of the notification's interpretation in the context of the case.