1999 (8) TMI 466 - AT - Central Excise

Summary

Issues Involved:

1. Entitlement to the benefit of exemption Notification No. 120/84-C.E. for the product 'Super TT'.
2. Classification of 'Super TT' under the Central Excise Tariff.
3. Applicability of the extended period of limitation for demand of duty.
4. Validity of the penalty imposed.

Detailed Analysis:

1. Entitlement to the Benefit of Exemption Notification No. 120/84-C.E.:

The appellants argued that their product, 'Super TT', is a blended lubricating oil and should be entitled to the benefit of exemption Notification No. 120/84-C.E., which exempts blended or compounded lubricating oils from excise duty. The Department contended that the said Notification is applicable only to lubricating oils falling under sub-heading 2710.60, which includes oils with a flash point above 94^0C. Since 'Super TT' has a flash point below 94^0C, it falls under sub-heading 2710.99 and is not eligible for the exemption.

The Tribunal, in the majority decision, held that the benefit of the Notification is not available to 'Super TT' because it does not meet the definition of lubricating oil under sub-heading 2710.60. The definition in the tariff is specific and excludes oils with a flash point below 94^0C. Therefore, 'Super TT' cannot be considered a lubricating oil for the purposes of the exemption Notification.

2. Classification of 'Super TT' under the Central Excise Tariff:

The appellants classified 'Super TT' under sub-heading 2710.99, which is a residuary entry for other petroleum products not specifically classified elsewhere. The Tribunal agreed with this classification, acknowledging that while 'Super TT' is used as a lubricating oil, it does not meet the criteria for classification under sub-heading 2710.60 due to its flash point.

3. Applicability of the Extended Period of Limitation for Demand of Duty:

The appellants argued that the demand for duty is barred by limitation as they had disclosed all relevant facts to the Department, including the flash point of 'Super TT'. The Tribunal examined the classification lists and found that the appellants had indeed disclosed the flash point and claimed the benefit of the exemption Notification with the approval of the classification lists by the Assistant Commissioner. Therefore, there was no suppression or misstatement of facts by the appellants.

The Tribunal held that the extended period of limitation under Section 11A of the Central Excise Act is not applicable in this case. The demand for duty in Appeal No. E/R-349/96 was set aside as barred by limitation, and the demand in Appeal No. E(SB)5084/93 was partly set aside for the period beyond the normal six months limitation.

4. Validity of the Penalty Imposed:

In Appeal No. E/R-349/96, a penalty of Rs. 30 lakhs was imposed. The Tribunal, considering the facts and circumstances, set aside the penalty, noting that the appellants had acted in good faith and with the approval of the classification lists by the Department.

Separate Judgments:

The Tribunal delivered separate judgments by different members. The majority decision, including Member (T) and the Vice-President, held that 'Super TT' is not entitled to the benefit of exemption Notification No. 120/84-C.E. and confirmed the demand of duty for the normal period of limitation. The dissenting Member (J) proposed that 'Super TT' should be entitled to the exemption as the Notification did not specify any tariff heading and extended the benefit to lubricating oils in general.

Final Order:

1. The appellants are not entitled to the benefit of Notification No. 120/84-C.E. for 'Super TT'.
2. The demand of duty in Appeal No. E/R-349/96 is set aside as barred by limitation.
3. The demand of duty in Appeal No. E(SB)5084/93 is confirmed for the normal period of six months.
4. The penalty imposed in Appeal No. E/R-349/96 is set aside.