2000(02)LCX0006

IN THE CEGAT, COURT NO. III, NEW DELHI

Ms. Jyoti Balasundaram, Member (J) and Shri V.K. Agrawal, Member (T)

PANAMA PETRO CHEM PVT. LTD.

Versus

COLLECTOR OF CUSTOMS, AHMEDABAD

Final Order No. 87/2000-C, dated 17-2-2000 in Appeal No. C/1770/94-C

CASE CITED

Continental Petroleum Ltd. v. Collector — 1999(09)LCX0203 Eq 2000 (115) ELT 0458 (Tribunal) — Relied on [Paras 3, 6]

Advocated By :   Shri Gopal Prasad, Advocate, for the Appellant.

Shri Ravindra Babu, JDR, for the Respondent.

[Order per : V.K. Agrawal, Member (T)]. - The issue involved in this appeal filed by M/s. Panama Petrochem Pvt. Ltd. is whether the Waste, Oil imported by them, is classifiable under sub-heading 3403.19 of the First Schedule to the Customs Tariff Act as confirmed in impugned order.

2. Shri Gopal Prasad, learned Advocate, submitted that the Waste Oil in question is the residue of lubricating oil after their use in various industrial and transport machineries; that this residue does not any more function as lubricating oil; however, it could be used in a recycling process to be refined for recovery of lubricating oil; that from the mention in chemical test report that the oil has characteristic of lubricating oil. It cannot be presumed to refer to characteristic of lubricating preparation to be classified under Heading 34.03 of CTA; that the impugned oil can, at best, be referred only as having the characteristics of lubricating oil qualifying to fall under Heading 27.10 of C.T.A.; that the stress on the percentage of mineral oil content by weight will lose its significance, once the oil is said to have characteristics of lubricating oil and it would appear to merit classifiable under Heading 27.10 of C.T.A.; that even lubricating oil in prime condition before being taken into use and left over as waste oil does not qualify to get classified under Heading 34.03 of C.T.A.; that if the prime oil itself cannot fall under Heading 34.03 the question of classifying waste oil under that heading is erroneous; that the waste oil is not a preparation according to a set recipe. He further, submitted that even Heading 27.10 is intended to cover only petroleum oils resulting from processing of mineral oils which are other than crude by processes like distillation or refining and the Waste oil does not fall under any of the categories; the parent lubricating oil from which the waste oil has resulted technically falls outside the purview of Heading 27.10 mainly for the reason that it ceased to contain by weight 70% or more of petroleum oil; that it is mentioned in the test report that the mineral oil content is less than 70% by weight and the flash point is above 93.3°C. The learned Advocate contended that applying Rule 4 of the Rules for Interpretation of the Tariff, sub-heading 2713.90 of C.T.A. appears to be most appropriate heading as the impugned oil is nothing but a residue or left over remanent from petroleum oil initially taken into use; that according to Explanatory Notes of H.S.N. “Other Residues of Petroleum Oils” includes acid residue and spent bleaching earth containing a proportion of oil; that the Waste oil containing a proportion oil is most akin, both insofar as composition of the materials and end-use of the substance are concerned.

3. Dr. R. Babu, learned D.R., submitted that the waste oil is only collection of used lubricating oils and is valuable for obtaining a reusable lubricating oil after the process of purification; that as per test report, the mineral oil content in the sample is less than 70% by weight having characteristics of lubricating oil; that the admitted use of the impugned oil is for lubricating purpose and since on importation, the waste oil possesses characteristics of lubricating preparation of Heading 34.03, the impugned oil is classifiable under Heading 3403.19 of C.T.A. He also submitted that the impugned oil is not a by-product of any chemicals arising out of any manufacturing process, it cannot be considered as residue of chemicals. Finally he mentioned that the issue regarding classification of waste oil has been decided by the Appellate Tribunal in the case of Continental Petroleum Ltd. v. C.C.E., Ahmedabad, 1999(09)LCX0203 Eq 2000 (115) ELT 0458 (T) = 1999 (035) RLT 684 wherein the goods in question was classified under Heading 34.03 of CTA.

4. We have considered the submissions of both the sides. The rival headings reads as under :-

5. The Assistant Collector has referred to H.S.N. Explanatory Notes according to which the residues of petroleum oils include –

(i)       Extracts derived from the treatment of lubricating oils with certain selective solvents.

(ii)     Petroleum green and other resinous substances obtained from Petroleum.

(iii)    Acid residues and spent bleaching earth containing a portion of Oil.

6. The Assistant Commissioner has given his specific finding in the adjudication order that the impugned goods are not the by-product of any of the processes mentioned in (i) to (iii) above and as such is not a residue of petroleum oils warranting classification under sub-heading 2713.90. The Collector (Appeals) also in the impugned Order has given his findings that Waste oil cannot be classified under sub-heading 2713.90 since this covers the by-products of petroleum oils arising out of the treatment of lubricating oil and other chemical reactions in the process. The appellants have not rebutted these findings, H.S.N. Explanatory Notes also provides that “Bitumen, coke and other residue fall in this heading (27.13), if they result from the treatment of shale oils or of other oils obtained from bituminous minerals”.

Further admittedly the waste oil imported is the residue left over from lubricating oil used in various industrial and transport machinery and not obtained as result of treatment of shale oils or of other oils from bituminous minerals. Further, the Appellate Tribunal in the case of Continental Petroleum, supra, has held that the waste oil is classifiable under Heading 34.03. Thus following the ratio of the said decision, we hold that the waste oil imported by the appellants is classifiable under sub-heading 3403.19, the First Schedule to the Customs of Tariff Act. Accordingly, the appeal filed by the appellants is rejected.

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Equivalent 2003 (151) ELT 670 (Tri. - Del.)

Equivalent 2000 (039) RLT 0269