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2024 (6) TMI 1038 - AT - Central ExciseIssues Involved: 1. Whether the reprocessing of waste oils into lubricating oils amounts to 'manufacture' under the Central Excise Tariff Act, 1985. 2. Whether the demand for excise duty is barred by limitation. 3. Whether the appellant is entitled to the benefit of SSI exemption under Notification No. 8/2003-CE dated 01.03.2003. Issue 1: Manufacture of Reprocessed Oils The appellant, M/s. Southern Refineries Limited, contended that their activity of converting waste oils into lubricating oils does not amount to 'manufacture' as per Section 2(f) of the Central Excise Act, 1944, and Chapter Note 9 to Chapter 27 of the Central Excise Tariff Act, 1985. The Commissioner had concluded that the reprocessing constituted 'manufacture' based on Note 9 of Chapter 27, which states that "labelling or relabelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture." The Tribunal, however, found that Note 9 of Chapter 27 specifically applies to lubricating oils and lubricating preparations and not to waste oils. It was observed that the appellant procures waste oils and processes them into reprocessed base oil, which does not fall under the definition of 'manufacture' as per the given legal provisions. The Tribunal referred to the CBEC Circular No. 1024/12/2016-CX dated 11.04.2016, which clarified that the process of re-refining waste oil does not amount to manufacture unless it involves labelling, repacking, or other treatments specified in Chapter Note 9. Consequently, the appeals E/327/2012, E/328/2012, and E/21890/2015 were allowed in favor of the appellant. Issue 2: Limitation on Demand for Excise Duty Regarding the limitation, the Tribunal upheld the Commissioner's justification for issuing the show-cause notice after the vacation of the stay granted by the Hon'ble High Court. The stay was in effect from 23.02.2001 to 28.10.2009, and the notice was issued within the permissible period excluding the stay duration, as per the Explanation under Section 11A(1) of the Central Excise Act, 1944. Issue 3: SSI Exemption On the issue of SSI exemption, the Tribunal held that since the processes undertaken by the appellant do not amount to manufacture, the value of such goods should not be included in the aggregate value of clearances for the computation of SSI exemption eligibility. Thus, the appellant is entitled to the benefit of SSI exemption under Notification No. 8/2003-CE dated 01.03.2003. The appeal No. E/21902/2015 was allowed. Conclusion The Tribunal modified the respective impugned orders and partially allowed the appeals E/327/2012, E/328/2012, and E/21890/2015 by remanding them to the original authority for verification of whether the appellant had discharged duty on the reprocessed oil cleared as 'lubricants'. The appeal No. E/21902/2015 was fully allowed.
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