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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
S.S. KANG, V.K. Agrawal, JJ.
Mineral Oil Corporation -Appellant
Versus
Commissioner of Central Excise, Kanpur -Respondent
Final Order No. 489/99-C Appeal No. E/266/97-C, 489 of 1999, 266 of 1997
Decided On : 25-06-1999
Per V.K. Agrawal:
The issue involved in this appeal filed by M/s. Mineral Oil Corporation is whether the process of reclamation of transformer oil from used transformer oil amounts to manufacture so as to attract levy of duty of excise.
2. Briefly stated the facts are that the appellants manufacture virgin transformer oil. They are also engaged in the reclamation of duty paid used transformer oil on their own account out of used transformer oil purchased from the market and also on job work basis out of used transformer oil received from U.P. State Electricity Board (UPSEB). The Commissioner, Central Excise, Kanpur, under the impugned order dated 24.12.96, confirmed the demand of Central Excise duty amounting to Rs. 5,30,246.10 on the reclaimed transformer oil cleared during the period from 24.3.96 to 30.6.96 after classifying the reclaimed transformer oil sub-heading 2710.90 of the Schedule to the Central Excise Tariff Act, holding that manufacture is a process of converting some material into a form adopted for uses to which in its original form it could not be so used; that the appellants removes the impurities to enhance the insulating quantities of the transformer oil; that used transformer oil would be covered under broad category of transformer oil feed stock; that accordingly process undertaken by the appellants to change used transformer oil into transformer oil would amount to manufacture. The Commissioner had relied upon the following decisions :-
(i) Hindustan lever Ltd. Vs. CCE, 1985 (22) ELT 232 (T)
(ii) CCE Vs. Jayone Oil Mills Pvt. Ltd., 1989 (40) ELT 287 (SC)
(iii) International Tractor Co. Vs. UOI, 1977 (1) ELT (J133-Bom)
(iv) Apar Pvt. Ltd. Vs. CCE, 1987 (28) ELT 70 (T)
3. Shri R. Santhanam, learned Advocate, submitted that the reclamation of duty paid used transformer oil does not give rise to nor does it constitute, manufacture of any excisable goods: that used transformer oil is subjected to the process of purification in which impurities, which had come in the oil in the course of its use, are removed; that the manufacture of fresh transformer oil requires drastic/strict treatment of chemicals whereas in the case of reclamation, the requirement of treatment of chemicals is very mild one depending upon the percentage of contamination of the used transformer oil; that the process of reclamation does not involve any change of the characteristics of oil as now new product emerges as a result of purification of duty paid waste oil; that input and output are the same and as such no manufacturing activity had been undertaken by the appellants; that the Principal Collector, Central Excise, Kanpur in letter dated 15.11.94, addressed to UPSEB opined that reclamation of used transformer oil through the process undertaken for its purpose would not amount to manufacture within the provisions of section 2 (f) of the Central Excise Act. The learned Advocate contended that the Commissioner was duty bound to abide by and follow the order of the Principal Collector; that further the impugned order had been passed in disregard and defiance of the judicial pronouncements. He relied upon the decision in the case of CCE Vs. Crescent Chemical Corporation, 1990 (48) ELT 458 (T) wherein it was held that "It is the production or manufacture of lubricating oil which attracts the charge of excise duty and not the processing of lubricating oil as such. One may add chemicals to lubricating oil, one may subject lubricating oil to a process by which its usability may be reduced or enhanced. That would not attract the applicability of item 11-A so long as the lubricating oil retains its character as lubricating oil and does not become a different commodity. He also placed reliance on the decision of Bombay High Court in the case of Commissioner, Sales Tax Vs. Oil Processors Pvt. Ltd., Sales Tax Reference No. 14 of 1992 dated August, 1997. The Bombay High Court held that every process undertaken on the goods to make them fit for the market
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