2013 (12) TMI 170 - AT - Central Excise

Review/Rectification of order Stay application processing of waste oil consisting of various types of oil like base oil, transformer oil, etc. - Held that - When amendment to the tariff entry under Chapter 27 was made for no consideration of statute law, renders the decision to be per incuriam - The Chapter Note using the word treatment has widened the scope of that entry to cover within its fold all process adopted to render that process to be manufacture. Prima facie there is no balance of convenience in favour of appellant and the process of treatment adopted by appellant was manufacture - Following Apex Court decision in Oracle India Software Ltd. 2010 (1) TMI 9 - SUPREME COURT OF INDIA - the legislative entry and chapter note should be interpreted in a manner to achieve the object sought to be achieved by that note without defeating object - it is not possible to agree with the appellant that it requires dispensation of pre-deposit when interest of revenue cannot be sacrificed on the facts situation - The only benefit that can be extended to the appellant today is to allow some more weeks time to make deposit of 50% of the duty demand - Appellant is accordingly directed to make above deposit within another four weeks time from today to protect interest of Revenue - modification in stay order denied.

Summary

Issues:
1. Disparity in taxing appellant compared to other similar assessees.
2. Whether the process of converting waste oil into good oil amounts to manufacture.
3. Time-barred demand.
4. Interpretation of Chapter Note 4 of Chapter 27.
5. Pre-deposit requirement and balance of convenience.

Analysis:

Issue 1: Disparity in taxing appellant compared to other similar assessees
The appellant argued that the Tribunal should not tax them when other similar assessees were not taxed for processing waste oil. They relied on past decisions like Mineral Oil Corporation case where the process did not amount to manufacture. The appellant emphasized that reclamation of usable lubricating oil does not constitute manufacture, as held in previous cases. The Tribunal noted the arguments but found that post-amendment Tariff entry did not support the appellant's claim of no manufacture, leading to a decision to uphold the levy on the appellant.

Issue 2: Process of converting waste oil into good oil as manufacture
The appellant contended that the process of converting waste oil into good oil should not be considered as manufacture. They relied on various decisions to support their argument. However, the Tribunal found that the term 'treatment' in Chapter Note 4 of Chapter 27 was crucial, indicating that the process adopted by the appellant amounted to manufacture. The Tribunal emphasized that the legislative entry and chapter note should be interpreted to achieve the intended objective without compromising the revenue's interest.

Issue 3: Time-barred demand
The appellant raised the argument that the demand was time-barred. However, the Tribunal did not delve into this issue in detail in the judgment.

Issue 4: Interpretation of Chapter Note 4 of Chapter 27
The appellant argued that waste lubricating oil should fall under specific sub-headings of Chapter 27, and Chapter Note 4 did not apply to their goods. On the contrary, the Revenue submitted that Chapter Note 4 encompassed the appellant's case due to the treatment process applied to waste oil. The Tribunal found that the word 'treatment' in the Chapter Note expanded the scope to cover processes amounting to manufacture.

Issue 5: Pre-deposit requirement and balance of convenience
The Tribunal considered the balance of convenience and the interest of revenue in deciding the pre-deposit requirement. While the appellant sought dispensation of pre-deposit, the Tribunal found that waiving it would prejudice the revenue. The Tribunal directed the appellant to deposit 50% of the duty demand within a specified time frame to protect the revenue's interest. The Tribunal highlighted that financial difficulties expressed by the appellant were not sufficient grounds to waive the pre-deposit requirement, emphasizing the importance of protecting the revenue's interest.

In conclusion, the Tribunal upheld the levy on the appellant, considering the crucial term 'treatment' in Chapter Note 4 of Chapter 27 and interpreting it to cover processes amounting to manufacture. The Tribunal balanced the interests of both parties and directed the appellant to make a partial deposit to protect the revenue's interest.