2009 (2) TMI 928 - HC - Central Excise

Summary

Issues involved:
Interpretation of the term "manufacture" in the context of re-processing lubricating oil for sale; Constitutional validity of the Chapter Note introduced by the Finance Act 2000; Jurisdiction of the Central Excise Department in imposing excise duty on re-processed lubricating oil.

Analysis:
The petitioner, engaged in re-processing de-graded lubricating oil for sale, faced a challenge following the amendment to the Central Excise Tariff Act in 2000. The amendment introduced a Chapter Note stating that certain treatments, including repacking for marketability, shall amount to "manufacture." This led the Central Excise Department to claim that re-processing of lubricating oil falls under this definition, making the petitioner liable for excise duty.

The Central Excise Act defines "manufacture" broadly to include any process specified in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act. The addition of the Chapter Note led to the Department's stance that re-processing constitutes manufacture for marketability, justifying the imposition of excise duty on the petitioner's products.

The petitioner, dissatisfied with the orders passed against them, filed a writ petition challenging the constitutional validity of the Chapter Note. However, they expressed willingness to pursue this question in a more suitable case. Both the petitioner and the Central Excise Department agreed on the importance of expeditiously resolving the appeal pending before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) in Bangalore.

In light of the mutual agreement, the court disposed of the original petition with a direction to CESTAT to promptly decide on the appeal within three months. The interim order in the original petition would remain in effect until the appeal's resolution. This judgment aimed to address the conflicting interpretations of "manufacture" concerning re-processing lubricating oil and ensure a timely resolution of the legal dispute between the petitioner and the Central Excise Department.