AI Structured Summary
Not yet generated for this judgment
Judgment
These are two Appeals, u/s 35G of the Central Excise and Salt Act, 1944 (hereinafter referred to as the ''Act''), challenging the order dated 2nd July, 2013, rejecting the Miscellaneous Applications filed by the appellants and maintaining the order dated 1st October, 2012, passed on the Applications, filed u/s 35 of the Act. Appeal No. 224 of 2013 is being filed by the appellant, M/s. IFP Petro Products Private Limited and the Appeal No. 225 of 2013 is being filed by Sri Anant Bhargava, the Director of the Company.
Briefly stated, the facts giving rise to the present Appeals are that the appellant No. 1 is a Private Limited Company, incorporated under the Indian Companies Act, (hereinafter referred to as the ''Company''), engaged in the activity of procuring lubricant oil in bulk from M/s. Indian Oil Corporation and Bharat Petroleum Corporation (BPCL) and repacking the same in the containers and returning the same to the original manufacturer on the payment of duty. The appellant is paying the duty on such manufactured product and there is no dispute in this regard. The second activity of the Company is that the appellant procures various waste/used oil from various service stations, like, M/s. Honda and M/s. Maruti Udyog etc. and is involved in the processing of such oil employing the process of dehydration, distillation, clay polishing and filtration etc. By means of the aforesaid processing, impurities etc. are being removed from the used/burnt oil. The oil so obtained from such waste/used oil is being packed and sold as base oil, lubricating oil and transformer oil etc. to the consumers. Such lubricating oil appears to be covered under Chapter 2710 of the Central Excise Tariff. For the period in dispute, the Company could not pay the Central Excise duty on the processed oil on the ground that the processing involved in obtaining such oil does not amount to manufacturing within the ambit of Section 2(f)(ii) of the Act. According to the Department, the processing of such oil, referred hereinabove, amounts to manufacture, in view of Note 4 of Chapter 27.
According to the Department, the process undertaken by the Company, in respect of the waste oil, is adoption of a treatment to render the product marketable to the consumers and hence amount to manufacture by virtue of Section 2(f)(ii) of the Act, read with Note 4 of Chapter 27. Accordingly, a show-cause notice dated 11th April, 2011 was issued to the Company for a demand of duty to the tune of Rs. 1,92,02,127/-, in respect of the clearance of the lube oil etc. during the period from 2006-07 to 2010-11 (October 2010), along with the interest thereon and also for imposition of penalty on the Company as well as on Sri Anant Bhargava, Director of the Company. Subsequently, another show-cause notice, dated 29th November, 2011 was issued for the subsequent period from 1st November, 2010 to 31st August, 2011, raising a demand of duty to the tune of Rs. 62,80,045/-, along with the interest thereon and also for imposition of the penalty on the Company as well as on its Director.
The Company as well as the Director of the Company filed the replies to the show cause notice. The Commissioner, Central Excise, Ghaziabad vide its order dated 23rd February, 2012, treated the process undertaken by the Company, referred hereinabove, in respect of the waste oil as manufacturing, in terms of Section 2(f)(ii) of the Act, read with Note 4 of Chapter 27 of the Central Excise Tariff and upheld the total duty demanded at Rs. 2,54,82,272/-, along with interest thereon, u/s 11-AB and besides it imposed a penalty of equal amount u/s 11-AC and further imposed a sum of Rs. 10 lakh towards the penalty on Sri Anant Bhargava, the Director of the Company under Rule 26 of the Central Excise Rules, 2002. Against the order of the Commissioner, the Appellant No. 1 as also the Appellant No. 2, both, filed two Appeals, being Appeal Nos. 1350 and 1351 of 2012, along with the Stay Applications, being Stay Application Nos. 1714 and 1715 of 2012, respectively, u/s 35-F of the Act.
The Bench of the Tribunal, on consideration of the entire facts and circumstances, vide order dated 1st October, 2012, has allowed the Stay Applications in part, directing to deposit 50% of the duty demanded within a period of eight weeks and waived requirement of deposit of the balance amount of duty, interest and the penalty and further directed that in case if the company deposits 50% of the duty demanded, the requirement of the pre-deposit of the penalty by the Director of the Company, Sri Anant Bhargava shall also stand waived.
Being aggrieved by this order of the Tribunal, the Company filed Central Excise Appeal No. 801 of 2012 before this Court. It is relevant to mention here that no appeal has been filed by the appellant No. 2.
At the time of the hearing of the aforesaid Appeal, learned counsel for the appellant submitted that the other manufacturers, who are involved in similar activities are not subjected to levy of excise duty and said aspect has not been taken into consideration by the Tribunal. On the aforesaid argument, this Court dismissed the Appeal with the observations that "From the impugned order, we find that it does not appear that this plea was taken before the Tribunal as there is no observation on this point. In view of the decision of the Hon''ble Supreme Court in the case of State of Maharashtra Vs. Ramdas Shrinivas Nayak and Another, , the proper remedy is to move an application before the Tribunal for review/rectification of the impugned order."
The appellants filed two Miscellaneous Application for review/rectification of the order dated 1st October, 2012. The aforesaid two applications have been disposed of by the impugned order dated 2nd July, 2013. By the impugned order, the Tribunal has maintained its earlier order dated 1st of October, 2012.
Heard Sri Bharatji Agrawal, learned Senior Advocate, assisted by Sri Piyush Agrawal, learned counsel for the appellants and Sri Ashok Singh, appearing for the respondents.
Learned counsel for the appellants submitted that along with the Miscellaneous Applications, the Company has submitted a list of 257 such Units, which are involved in similar activities of processing, but they have not been subjected to any such duty on the oil obtained as a result of such processing. The list of such units is at pages from 125 to 169 whereas the appellant-Company has been subjected to duty. He submitted that the Central Excise Act is a Central Act and is applicable to all the manufacturing units across the country. It is not justified that some of the units be subjected to levy of the duty and some units be exempted. There should be uniformity in levy of the duty. In support of the contention, he placed reliance upon paragraph 105 of the decision of the Gujarat High Court in the case of Darshan Boardlam Ltd. Vs. Union of India, . He submitted that in the case of 2000 (88) ECR 640 , similar activity has been held to be not amounting to manufacturing u/s 2(f) of the Act and the appeal filed by the Department against the order of the Tribunal has been rejected by the Apex Court in the case of Collector of Central Excise v. Mineral Oil Corporation 2002 (140) ELT 248 (SC). The view of the Tribunal in the case of Mineral Oil Corporation (supra) has been followed by the Chennai Tribunal in the case of 2009 (16) S.T.R. 253 and following the two aforesaid decisions of the Tribunal the Bench of the Bangalore Tribunal, in the case of 2010 (251) ELT 439 , has held that reclamation of the transformer oil from used transformer oil does not amount to manufacture so as to attract levy of Central Excise Duty.
Taking aid of the aforesaid decisions, learned counsel for the appellants submitted that the appellants are able to make out a strong prima facie case on merit and, therefore, pre requisite requirement of deposit of the entire amount of duty ought to have been waived. The Tribunal is not justified in directing to deposit 50% of the amount of duty.
Sri Ashok Singh, learned counsel for the respondents, submitted that the decisions relied upon by the learned counsel for the appellants are the decisions when Note 4 of Chapter 27 was not available and in none of the decision Note 4 of Chapter 27 has been considered. He submitted that Note 4 of Chapter 27 provides that in relation to the lubricating oils and lubricating preparation of heading 2710, the adoption of any other treatment to render the product marketable to the consumer amounts to manufacture. The Tribunal, having regard to the entire facts and circumstances, has directed the Company to deposit only 5096 of the duty and waived the prerequisite requirement of deposit of the balance amount of the duty, interest and the penalty, which, according to him is on a lenient side. It is further submitted that the Apex Court in the case of Benara Valves Ltd. and Others Vs. Commissioner of Central Excise and Another, , while considering Section 35-F of the Act, has held that undue hardship is a matter within the special knowledge of the manufacturer for waiver and has to be established by him. The Apex Court further held that the word "undue" adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. This view of the Apex Court has been subsequently followed by another Division Bench of the Apex Court in the case of Ketan V. Parekh Vs. Special Director, Directorate of Enforcement and Another, .
We have considered rival submissions.
It is a settled principle of law that it is upon the appellants to establish the case of undue hardship for waiver of the prerequisite requirement of deposit of the amount of duty, interest and the penalty. To consider the case of the ''undue hardship'', a strong prima facie case and the financial hardship are to be examined. No argument has been either advanced or pressed by the learned counsel for the appellants in respect of financial hardship. It appears that this issue has not been raised before the Tribunal also as there is nothing either in the order dated 1st of October, 2012 or in the order dated 2nd of July, 2013 of the Tribunal in this regard and before this Court also in Appeal filed earlier, the financial hardship has not been pleaded.
It would be appropriate to refer Tariff Entry 2710 and Note 4 of Chapter 27, which reads as follows:
Petroleum oils and the 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; waste oils.
Note 4 of Chapter 27:
In relation to the lubricating oils and lubricating preparations of heading 2710, labelling or relabelling of containers or repacking from bulk packs to retail packs or adoption of any other treatment to render the product marketable to the consumers, shall amount to manufacture.
In the case of CEE JEE Lubricants (supra), the earlier decisions of the Tribunal in the case of Metro Transport Company (supra) and Mineral Oil Corporation (supra) have been followed.
Perusal of the decisions in the case of Metro Transport Company (supra) and Mineral Oil Corporation (supra), reveal that Note 4 of Chapter 27 has not been considered. Though the appellants have filed list of 257 units and claimed that such units are not subjected to levy of duty on the oil obtained by the processing, which is being adopted by the appellant-Company, but such claim of the appellant is not substantiated by any document. No order has been annexed to substantiate the claim and, therefore, in the absence of any material to that effect, such claim cannot be accepted outrightly at this stage. Moreover, even assuming that some of the units are not paying the excise duty on such processed oil and are also not being subjected to any excise duty, then also it cannot be a ground for the waiver of the duty in the case of the appellant, if it is legally payable. Moreso, it appears that the list of 257 Units filed before the Tribunal along with the Miscellaneous Application has not been filed in the adjudication proceeding and even before the Tribunal at the time of hearing of application u/s 35F of the Act.
In view of the above, we are of the view that the appellants are not able to make out a strong, prima facie case, which may warrant to allow complete waiver of the prerequisite requirement of deposit of the duty. We are further of the view that, having regard to the entire facts and circumstances, the order of the Tribunal directing to deposit 50% of the duty demanded and allowing the waiver of the balance amount of duty, interest and the penalty as also the waiver of the deposit of entire amount of penalty in the case of Appellant No. 2, the Director of the Company is wholly justified and does not suffer from any error and does not require any interference. Moreover, appellants are not able to make out any case of review or rectification of the earlier order.
In view of the discussions made above, both the appeals fail and are, accordingly, dismissed.
The Appellant No. 1 is directed to deposit 50% of the duty as directed by the Tribunal, within a period of six weeks and submit the receipt in support thereof before the Tribunal by 30th November, 2013 failing which the appeals shall stand rejected. The Tribunal is directed to decide the appeals expeditiously. Any observations made in the order will not prejudice the decision of the Tribunal on merits.