Order date – 28 November 2022

Facts –

• The Appellant, Alicid Organic Industries Limited, purchasing waste/ sludge oil from vessels and other sources. This is sold as waste oil/sludge oil and is purchased by the appellant also as waste oil /sludge oil. For removing impurities from said waste oil appellant undertake various processes. The processing undertaken by the appellant is informed of filtering distillation, dehydration, centrifuging etc.
• The Adjudicating Authority demanded duty on the ground that the used oil which was unfit for use as fuel oil were made fit for use by the appellant by refining or reprocessing the same and hence, characteristic and the use has changed. Due to which Chapter Note No. 4 of Chapter 27 gets attracted and the said activity becomes manufacture.

Issue –

• Whether the conversion of waste oil/ sludge into reclaimed fuel oil/re-refining used oil amounts to manufacture as per Section 2 (f) of Central Excise Act, 1944 and classifiable under Central Excise Tariff Act, 1985 and attracting Central Excise duty or otherwise?

Order –

• The Tribunal finds that in the present case, the demand is for the subsequent period whereas on the same issue for the earlier period the case has been decided in favour of the appellant by this Tribunal order dated 02.08.2022
• It was held that relying on the Tribunal Bangalore ruling in the case of Cee Jee Lubricants v. CCE, Cochin [2010 (251) E.L.T. 439 (Tri.-Bang.)] wherein it was clearly held that Manufacture - Refining the used/waste oil procured from market, in the form of vacuum distillation, centrifuging and removal of moisture, carbon and other impurities, does not amount to manufacture - Section 2(f) of Central Excise Act, 1944 - Chapter 27 of Central Excise Tariff.
• The instant case is the reclaimed fuel oil which is also waste oil falling under 2710 99 00 but used as fuel only and is not a lubricating oil or used as lubricating oil. It is also worthwhile that similar to chapter note 4 for Lubricating oil and preparations there is no such chapter note for the product of the appellant in question. This also suggests that legislators are very conscious that recycled oil from waste oil and sludge should not be made amounts to manufacture and should not be liable to duty.
• The Tribunal also noticed that CBEC vide circular No. 1024/12/2006-CX dated 11.04.2006 also instructed that “the issue is interpretational in nature and therefore where a demand is raised pursuant to this circular, it should be raised for normal period of limitation only. SSI benefit, where admissible, should be extended”. Therefore, in this fact the demand confirmed by the Ld. Commissioner invoking the extended period legally not sustainable and we set aside the same on limitation too.
• Therefore, following the above decision of this Tribunal, in the present case, the impugned order is not sustainable, accordingly, set-aside the same. 
• The appeal is allowed.