Case: M/S. Castrol India Ltd Vs. Comnr. Of Central Excise, Calcutta-I

2. The factual position in a nutshell is as follows:The appellant is engaged, inter alia, in the manufacture of blended or compounded lubricating oils. It also processes a product called "Super TT" which the appellant claimed to be a blended lubricating oil ordinarily used for lubrication. The undisputed process of manufacture of the said product as stated by the appellant is asOils are taken to the blending kettle, heated to remove moisture. Additives are added and mixed well. Temperature reduced and MTO and green dye added and mixed well, to get the final product.Admittedly, the flash point of the "Super TT" is below 94C Therefore, assessee appellant claimed that the same is not classifiable under Heading 2710.60 of the Tariff under Customs Tariff Act, 1985 ( in short the "Tariff Act") as the same covers lubricating oils having flash point more than 94-oC. As such, the product was claimed to be classifiable as others under sub-heading 2710.99. Revenue disputed the position and held that the benefit of the Exemption Notification No.120/84-CE dated 11.5.1984 is applicable only to the lubricating oils falling under sub-heading 2710.60, as there is no other heading for lubricating oil in the Tariff Act. The appellants stand was that the said Exemption Notification extends the benefit to all types of lubricating oils, irrespective of their classification. As its product is admittedly a lubricating oil, the scope of the Notification cannot be restricted to the lubricating oils falling under a particular tariff entry.4. Two show-cause notices issued related to demand of duty against the assessee in respect of their blended "Super TT" which was cleared at "nil" rate of duty during different periods. The said notices culminated into two different orders whereby proposed amount of duty and personal penalty were confirmed. The dates of show-cause notices, the period involved, the duty demanded and the penalty demanded are asofshow-causenoticePeriodinvolvedDemand of DutyPenalty1.(a) 29.1.19921.8.1991 to 31.12.1991Rs. 20,46,994.23Nil(b) 3.8.19921.1.1992 to 29.2.1992Rs. 10,77,390.00Nil(c) 1.10.19921.3.1992 to 31.8.1992Rs. 19,96,362.88Nil(d) 25.2.19931.9.1992 to 31.1.1993Rs. 19,83,411.76Nil2.28.1.1994Total7.1.1989to 31.7.1991Rs. 71,04,159.47Rs. 47,59,343.40Rs. 30lakhs5. Assessee preferred two appeals before the CEGAT. It was submitted that for a long time Exemption Notification dated 16.3.1976 in relation to Item no.11B and the rate of duty was nil was held applicable to it. The Entry 11B was repealed in the year 1984 and it became a part of Item 68. Thereafter Notification no.120/84 covered the field and the same notification continued upto 1994. In between the Tariff Act was introduced which introduced a new tariff in Chapter 27 w.e.f. 1.3.1986 under the Tariff Act. Section 5A(4) of the Central Excise Act, 1944 (in short the "Act") all along held th field. Originally Item No.11B was a part of the First Schedule of the Act. Prior to introduction of Section 5A(4) in the Act w.e.f 19.5.1988 Rule 8 of the Central Excise Rules, 1944 (in short the "Rules") provided for exemption. The Notification No.120/84-CE was issued on 11.5.1984 when the earlier Excise Tariff was a part of the First Schedule of the Act. The said notification exempted blended and compounded lubricating oils i.e. lubricating oils obtained by straight blending of mineral oils or by blending or compounding of mineral oils with other ingredients. The said exemption was granted without reference to any tariff item under which such blended and compounded lubricating oils were classified. The new Excise tariff contained in the Tariff Act came into force w.e.f. February 1986. Under that Tariff, blended or compounded lubricating oils with flash point above 94-oC were classifiable under sub-hearing 2710.60 and other lubricating oils along with other petroleum products were classified under Chapter sub-heading 2710.99 which was a residuary entry. The Exemption Notification No.120/84-CE continued un-amended till it was rescinded by Notification No.64/94-CE dated 1.3.1994. Three classification lists were filed by the appellant which were operative from 1.4.1986, 5.5.1996 and 1.3.1998. All these classification lists were approved by Assistant Commissioner by extending the benefit of Notification No.120/84. The classification list dated 18.3.1988 was operative for the relevant period under dispute. Since product was having flash point below 94ºC , therefore, there was no question of any suppression as alleged by the Department. It was further submitted that the notices were issued after prescribed period of limitation.6. The assessee-appellants stand was resisted by the Revenue on the ground that the assessee-appellant had given description of its product to claim benefit under Notification No.120/84 CE. Its product was not classifiable under Heading 2710.60 Wrong claiming of benefit establishes mala fide intention and, therefore, the extended period of limitation was rightly invoked by the Department. There is specific and unambiguous definition of lubricating oil under Chapter Heading 2710.60 of Chapter 27. Chapter Heading 27.10 covers a number of petroleum products and each category is further covered under a separate sub-heading. Sub-heading 60 covers lubricating oil and there is no other sub-heading covering lubricating oils. When the exemption notification granted exemption it necessarily means that lubricating oil falling under said sub-heading alone was covered.7. While the Judicial Member accepted the stand of the assessee-appellant, the Technical Member took the view that for the purpose of Exemption Notification No.120/84-CE lubricating oil for flash point below 94ºC cease to be lubricating oil as it acquires general description others under sub-heading 2710.99. Therefore, the Departments view was accepted. With the similar observations the third member concurred with the member technical and upheld the Departments stand.

Reasoning:
13. Undisputedly in the present case there was no reference to any tariff entry in the Notification. Therefore, the majority view is clearly unsustainable. Additionally, we find that CEGAT had in some other cases taken the same view as the minority view. It is fairly accepted by learned Additional Solicitor General that there has been no challenge to the said decisions one of which is Bharat Petroleum Corporation Ltd. vs. Commissioner of Central Excise, Kolkata-I (2003 (154) ELT 698 (Tri -Kolkata) decided on 30.10.2002.14. Exemption Notification 120/84-CE dated 11.5.1984, in view of what is prescribed in Section 5A(4) of the Act, continued to be operative and effective as it was not amended, varied, rescinded or superseded under the provisions of Section 5A of the Act.15. In Strouds Judicial Dictionary, 4th Edition, Vol.5, at page 2753, we find: "That is to say" is the commencement of an ancillary clauses, which explains the meaning of the principal clause. It has the following properties : (1) it must not be contrary to the principal clause; (2) it must neither increase nor diminish it; (3) but where the physical clause is general in terms it may restrict it; see this explained with many examples, Stukeley vs. Butler Hob. 1971". The quotation, given above, from Strouds Judicial Dictionary shows that, ordinarily the expression "that is to say" is employed to make clear and fix the meaning of what is to be explained or defined. Such words are not used as a rule, to amplify a meaning while removing a possible doubt for which purpose the word "includes" is generally employed. In unusual cases, depending upon the context of the words "that is to say", this expression may be followed by illustrative instances. (See State of T.N. vs. Pyare Lal Malhotra (1976 (1) SCC 834 ), Mahindra Engineering and Chemical Products Ltd. vs. Union of India (1992(1) SCC 727); Sait Rikhaji Furtarnal vs. State of A.P. (1991 Supp (1) SCC 202); and R. Dalmia vs. C.I.T. (1977 (2) SCC 467 ).16. The expression "that is to say" is descriptive, enumerative and exhaustive and circumstances to a great extent the scope of the entry. (See Commissioner of Sales Tax, M.P. vs. Popular Trading Company, Ujjain (2000 (5) SCC 511 ).17. The expression "that is to say" in sub-heading 2710.60 has to be interpreted to be words of limitation. The fact that sub-heading 2710.60 contains an exclusion clause goes to show that there may be other lubricating oils which may fall in the residuary heading "others".18. The sub-heading 2710.60 significantly uses two expressions. They are (i) "that is to say" and (ii) "excluding". The first expression is used in description, enumerative and exhaustive sense and to a great extent circumstances the scope of the entry. But the second expression dilutes the pervasiveness by carving out an exception for the purpose of the particular sub-heading a particular type of lubricating oil. All other types of lubricating oil are covered by the residuary entry i.e. 2710.99.