1993 (4) TMI 164 - AT - Customs

Summary

Issues Involved:
1. Classification of imported "Used Lubricating Oil (Waste Oil)" for countervailing duty under the Central Excise Tariff.
2. Legality of importing "Used Lubricating Oil (Waste Oil)" without a specific license under the Import Policy and Imports (Control) Order, 1955.

Detailed Analysis:

1. Classification of Imported "Used Lubricating Oil (Waste Oil)" for Countervailing Duty:
The core issue revolves around whether the imported "Used Lubricating Oil (Waste Oil)" should be classified under Heading 2710.60 or the residuary Heading 2710.99 of the Central Excise Tariff for the purpose of levying countervailing duty.

Arguments by Appellants:
- The appellants contested the classification under Heading 2710.60, arguing that the Chemical Examiner's conclusion was based merely on the oil being slippery to touch.
- They pointed out a test report showing the mineral oil content as only 14.61%, which they claimed was ignored.
- They argued that the Chemical Examiner failed to determine the actual use, method of manufacture, and source, making the classification under Heading 2710.60 unsustainable.

Arguments by the Department:
- The Department maintained that the classification under Heading 2710.60 was correct, based on the mineral oil content and flash point as per the Custom House Laboratory's test.
- They argued that the appellants did not contest the classification under Heading 2710.00 of the Customs Tariff, which corresponds to Heading 2710.60 of the Central Excise Tariff.
- The Department dismissed the appellants' test report showing 14.61% mineral oil content, noting it was not presented during the proceedings before the Additional Collector.

Tribunal's Findings:
- The Tribunal noted that the Chemical Examiner's report indicated the mineral oil content exceeded 70% by weight and the flash point was over 94^0C.
- The report also certified the goods had characteristics of "Lubricating oil."
- The Tribunal found no force in the appellants' argument against the classification under Heading 2710.60, emphasizing the original import documents described the goods as "Used Lube Oil (Waste Oil)."
- The Tribunal concluded that the goods were correctly classified under Heading 2710.60 for countervailing duty.

2. Legality of Importing "Used Lubricating Oil (Waste Oil)" Without a Specific License:
The second issue concerns whether the import of "Used Lubricating Oil (Waste Oil)" without a specific license was permissible under the Import Policy and the Imports (Control) Order, 1955.

Arguments by Appellants:
- The appellants claimed the goods were covered by the Open General Licence (OGL) in terms of Sr. No. 1(iii) of Appendix 6 of the Import Policy.
- They argued that the prohibition on importing used goods under Clause 3(2) of the Imports (Control) Order was irrelevant to mineral oils.
- They contended that the goods should not be classified under Entry No. 174 of Appendix 2, Part-B, which pertains to Iron and Steel products.

Arguments by the Department:
- The Department argued that the goods were covered by Sr. No. 174 of Appendix 2, Part-B of the Import Policy, requiring a specific license.
- They emphasized that the goods were described as "Used Lube Oil (Waste Oil)" in the original documents, indicating they were not new goods as required by the OGL.
- The Department pointed out that the appellants arranged for the deletion of "Used Lube Oil" from the import documents, indicating an attempt to misdeclare the goods.

Tribunal's Findings:
- The Tribunal found that the import of "Used Lubricating Oil" was not permissible under OGL No. 1, which allowed the import of lubricating oil only up to a value of Rs. 50,000/- with a no objection from IOC.
- The Tribunal agreed with the adjudicating authority that the goods were not covered by a valid Import Licence and were imported in contravention of Section 3(2) of the Imports and Exports (Control) Act, rendering them liable to confiscation under Section 111(d) of the Customs Act, 1962.
- The Tribunal noted the appellants' substitution of the original import documents to misdeclare the goods, justifying the penalties imposed.

Conclusion:
The appeals were dismissed, upholding the classification of the imported "Used Lubricating Oil (Waste Oil)" under Heading 2710.60 of the Central Excise Tariff for countervailing duty and confirming the illegality of the import without a specific license, leading to the confiscation of the goods and imposition of penalties.