2008 (11) TMI 487 - AT - Central Excise

Summary

Issues:
- Whether the appellants were engaged in the manufacture of lubricating oil/re-refined lube oil within the meaning of Section 2(f) of the Central Excise Act.

Analysis:
The case involved a second round of litigation where the matter was remanded to the Commissioner (Appeals) without a view on merits. In the impugned order, the demand of duty against the appellants for "re-refined lubricating oil" was sustained for a specific period. The demand was primarily based on a statement by one of the partners of the appellant-firm indicating their engagement in the manufacture of re-refined lubricating oil. The appellants claimed to be refining waste engine oil through various processes to obtain lubricating oil. They argued that this process did not amount to "manufacture" under the Central Excise Act. The Commissioner (Appeals) did not examine whether the processes undertaken by the appellants constituted "manufacture."

The appellant's counsel contended that the question of whether their processes amounted to "manufacture" was not properly examined. They argued that there was no concrete evidence, apart from their statement, to support the claim of clandestine manufacturing of re-refined lube oil. The appellants emphasized that a mere statement should not be the basis for demanding duty without evidence of actual manufacture and clearance of excisable goods. The Respondent referred to the appellant's unretracted statement from December 1997 as evidence.

Upon review, the Tribunal found inconsistencies in the appellant's claims regarding their processes. While the partner's statement suggested adding chemical additives to virgin base oil for re-refined lube oil, the memorandum of appeal indicated multiple processes on used engine oil to obtain lubricating oil. This inconsistency led to the crucial question of whether the appellants were involved in the manufacture of excisable goods. The Tribunal concluded that this fundamental question was not addressed by the lower appellate authority, necessitating a remand for a fresh decision. The impugned order was set aside, and the appeal was allowed for a re-examination of whether the appellants were engaged in manufacturing lubricating oil/re-refined lube oil according to the Central Excise Act, emphasizing the appellants' right to a fair hearing.