Jyoti Balasundaram, Member (J)

1. The respondents herein imported a consignment of Gredag ML-12 Glass Mould Lubricant and Cildag Colloidal Graphite in oil. On test the goods were found to be in the form of black coloured viscous liquid composed of graphite and mineral oil, the mineral oil component exceeding 70% by weight. The goods were assessed under Heading 2710.00 of the Customs Tariff read with Notification 115/86-Cus., dated 17-2-1986 and Heading 2710.99 of CET. According to the importers, the goods were lubricating oil classifiable under Heading 2710.60 of the CET for the purpose of levy of additional duty and also eligible for the benefit of exemption under Notification 112/87. The Assistant Collector assessed the goods for the purpose of C.E. classification under Heading 2710.99 and did not extend the benefit of Notification 112/87. The Collector of Customs (Appeals) allowed the appeal of the importers holding the goods to be lubricating oil on the ground that the flash point of the imports exceeds 94%. He also concluded that the benefit under Serial No. VII of Notification 115/86 has been granted to the appellants which item relates to lubricating oils. Hence this appeal by the Department.

2. We have heard Shri M. Jayaraman, the learned DR and Shri R.K. Habbu, learned advocate.

3. Let us take a look at the relevant Central Excise Tariff Entries. Heading 2710.99 reads as -

"27.10 Petroleum oils and oils obtained from bituminous materials, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations.

2710.99 - Other"

Heading 2710.60 reads as -

"2710.60 Lubricating oil, that is to say, any oil as is ordinarily used for lubrication, excluding any hydrocarbon oil which has its flash point below 94°C."

4. According to the Department, the goods are a compound of lubricating oil containing graphite which itself is a lubricant and not a straight lubricating oil obtained by distillation or refining of crude petroleum oils or obtained from bituminous materials, meriting classification as a preparation containing petroleum oil and graphite and therefore, the question of flash point is not relevant or germane to the issue.

5. We are not able to accept the argument advanced on behalf of the appellant. Admittedly the imports have been assessed as "Petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations", under Heading 2710 of the Customs Tariff and this classification has not been challenged by the Customs authorities. The Assistant Collector also has not indicated the relevant serial No. of Notification 115/86 against which he extended the benefit of the notification. Serial No. VII of Notification is not restricted to straight lubricating oils and hence the benefit of Notification 115/86 has obviously been granted to the goods only under that Serial No. and not under Serial No. XI - such an inference is warranted in this case. For the purpose of countervailing duty, the goods fall for classification under Heading 2710.60 of the Central Excise Tariff (which is a specific entry for lubricating oils) and not under the residuary Heading of 2710.99. The definition of lubricating oil contained in Notification 112/87 is identical to its definition in serial No. VII of Notification 115/86-Cus. The certificate dated 4th August 1987 issued by the Indian Oil Corporation clarifies that Cildag and Gredag ML-12 are lubricating oils. Therefore the imports are correctly classifiable under Heading 2710.60 of the CET and chargeable to countervailing duty at the rate of Rs. 3675/- per metric tonne and exempt from payment of auxiliary duty under Notification 112/87.

6.