2014 (7) TMI 567 - AT - Central Excise

Denial of Exemption under Notification No 12/94 CE dated 01.03.1994 to Lubricating Preparations - Classification of oil manufactured by assessee - Lubricating oil or rolling mill oil - Equivalent penalty on account of suppression and willful misdeclaration of facts - Held that - manufactured product Servo Steerol C 6 fall under first part of the said tariff sub- headnig which is evident from the uses of the Servo Steerol C 6 mentioned in the literature of the Appellants - meaning of speciality oil referred to in the said Notification for the purpose of allowing total exemption from duty would not be relevant in interpreting the eligibility of present Notification in allowing concessional rate of duty to lubricating preparations when the said exemption Notification had been withdrawn from 1994 by the Govt., obviously, considering the same as no more relevant/necessary. Applying the meaning of lubricating preparation as mentioned in HSN and the actual use of the product as reflected by the Appellant in their literature, the said Servo Steerol C-6 are used as lubricating preparations. Consequently, the Appellant are eligible to the benefit of concessional rate of duty i.e. 10% for the clearances of the said products during the relevant period as prescribed under Notification No.12/94-CE dated 01.03.1994 and amended by Notification No.14/95-CE dated 16.03.1995. - Decided in favour of assessee.

Summary

Issues:
Classification of product under Central Excise tariff act, eligibility for exemption notification, categorization as lubricating preparation or speciality oil.

Detailed Analysis:

Issue 1: Classification of Product
The appeal revolves around the appellant's classification of their product "Servo Steerol C-6" under chapter sub-heading 3403 of the Central Excise Tariff Act, 1985. The appellant claimed the product to be a lubricating preparation eligible for a concessional rate of duty under an exemption notification. The revenue, however, alleged the product to be a speciality oil used in rolling mills, not qualifying as a lubricating preparation.

Issue 2: Eligibility for Exemption Notification
The dispute primarily concerns the eligibility of the appellant for exemption under Notification No.12/94-CE dated 01.03.1994, as amended by Notification No.14/95-CE dated 16.03.1995. The appellant argued that their product falls under the category of lubricating preparations, thus qualifying for the concessional rate of duty. On the other hand, the revenue contended that the product is a speciality oil and does not meet the criteria for the exemption.

Issue 3: Categorization as Lubricating Preparation or Speciality Oil
The crux of the matter lies in determining whether the product "Servo Steerol C-6" should be classified as a lubricating preparation or a speciality oil. The appellant emphasized that the product's use, as described in their literature, demonstrates its function as a lubricating preparation. They argued that the product's characteristics align with the definition of lubricating preparations as per the Harmonized System Nomenclature (HSN). The revenue, however, relied on past circulars and notifications to categorize the product as a speciality oil.

In the judgment, the Tribunal scrutinized the product's composition, functions, and usage to ascertain its classification. The Tribunal found merit in the appellant's argument, emphasizing that the product indeed qualifies as a lubricating preparation based on the definition provided in the HSN. The Tribunal rejected the revenue's contention and ruled in favor of the appellant, allowing them the benefit of the concessional rate of duty under the relevant exemption notification.

In conclusion, the Tribunal set aside the impugned order, declaring it devoid of merit, and allowed the appeal in favor of the appellant. The detailed analysis of the product's characteristics and the legal interpretations led to the decision in favor of the appellant, highlighting the importance of accurate classification and eligibility for exemption notifications in excise matters.