1. We have heard this Appeal on 20-9-1989 and dismissed it. Hereunder we set out our reasons for the same.
2. The respondent is manufacturer of 'White Oil'. It had filed classification list dated 12-5-1975 classifying the product under T.I.11-B. Sample of the product was drawn on 14-7-1975 for chemical test by the Central Excise Department and as alleged the product answered to the description of refined diesel oil covered under T.I. 8-II(a) of Central Excise Tariff. So Supdt. Central Excise issued Show Cause Cum Demand Notice on 29-12-1976 calling upon the respondent for payment of duty amounting to Rs. 1,61,118.80 for the period July 1968 to 24 June 1976. The respondent asked for the basis of this Show Cause Notice. In reply thereof the Superintendent issued corrigendum dated 28-3-1977 wherein it was stated that the report of the Chemical Examiner was the document on which the Department was relying. The earlier Show Cause Notice was issued under provisions of Rules 9/10-A of the Central Excise Rules 1944 but by corrigendum Rule 9 was deleted. On adjudication the Assistant Collector Central Excise held that the product was classifiable under T.I.8 of Central Excise Tariff and Confirmed the demand raised. The respondent preferred Appeal and the learned Collector (Appeals) set aside the Adjudication order with consequential relief to the respondent. This order has given rise to the present Appeal by the Revenue.
3. We have heard Shri V. Chandrasekharan, learned SDR for the appellant and Shri N.I. Mehta, learned Advocate for the respondent.
4. In the Appeal memo it is stated "the Collector (Appeals) has declined to accept the lower authorities decision of classification of the product in question under T.I. 8 on the ground that the Lower Authority has failed to establish the fact that the duty paid base mineral oil and white mineral oil having different characteristics, property/uses and a new product is emerged after mixing. The process of refining of Diesel Oil cannot be carried out by a Small Scale Unit, where sophisticated equipments are not available (in the appellants case, they carried out process of adding, mixing by vessels and stirrers) and refining is done from Crude Petroleum Products only. The permission to manufacture Refined Diesel Oil is to be obtained from Petroleum Ministry and Diesel Oil can be manufactured in refineries only. In view of this fact, it is observed that the lower authority has failed to establish that the appellant's unit is a refinery and have purchased Crude Petroleum Products for refining. In the absence of this evidence, Collector (Appeals) has declined to accept the Lower Authorities' decision for classification of the product in question under Tariff Item No. 8.
5. So it is clear that the revenue does not challenge decision of the learned Collector (Appeals) in as far as the product was not classifiable under T.I. 8. But the appeal memo contains following contentions; the first is that decision of the learned Collector (Appeals) that when the Adjudication took place Rule 10-A was deleted from the Rules and so the order passed by the Assistant Collector under the same Rule 10-A was not proper is not correct. Various arguments have been stated in the Appeal memo on this point but Shri N.I. Mehta has cited following cases: (i) Amit Processors Pvt. Ltd. v. Union of India and Ors. reported in 1985 (21) E.L.T. 24 (Guj.) (ii) Mahendra Mills Ltd. v. Union of India reported in 1988 (36) E.L.T. 563 (Gujarat).Ajanta Paper Products, Ratanpura, Agra-4 v. Collector of Central Excise, Kanpur and Anr.
In all the above cases it has been laid down that all the pending adjudications initiated under Rule 10 cannot be continued after omission of Rule 10 on 17-11-1980 - since notification omitting of Rule 10 did not contain any saving clause for the continuance of proceedings, already initiated, nor did Section 11A of the Central Excises Act create any fiction under which the proceeding under Rule 10 could be deemed to proceed with, and Section 6 of the General Clauses Act does not apply to cases of omission or repeal of Rules, therefore, the proceeding initiated under Rule 10 cannot be continued after the omission of Rule 10 on 17-11-1980. But in Atma Steel Pvt. Ltd. 1984 (17) E.L.T. 331, this Tribunal has decided that such proceedings can continue. But for deciding the present appeal we need not go into this contention as it would be simply academic.
6. The second contention is that the finding of the learned Collector (Appeals) that the respondent is purchasing duty paid mineral oil from M/s. Indian Oil Corporation and the same is purified and mixed with Sulphuric Acid, Sodium Carbonate and active earth and the process of adding and mixing cannot be called as manufacture, is not correct. For this various arguments have been advanced in the Appeal Memo itself.
Now it may be noted that as far as the process undertaken by the respondent for manufacturing the product is concerned there is no dispute. It has been stated in the Appeal memo that as per Ministry's F.08/25/69-CX.3 dated 23-6-1973. Lub Base Stocks i.e. Spindle H.V.I., Oils Spindle L.V.I. Oils and B.O.O. Lub-15 satisfy the definition of the refined diesel oil under Item No. 8 of Central Excise Tariff and are chargeable to duty under T.I. No. 11-A. Now Gujarat High Court has in the Mehta Bros. v. Superintendent of Central Excise (Special CA1175 of 1970) has held as under :- "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 excisable commodity".
It may be noted that in the appeal memo itself it has been stated as under: "In a similar case, in the case of M/s. Mehta Bros., the Gujarat High Court, Ahmedabad held that processed oil prepared by the petitioner is not chargeable to excise duty".
7. It is further contended that when the Collector\set aside the lower authority's order that the product was not classifiable under T.I.8 then he should have remanded the matter back to the lower authorities because it would have been classifiable under any other Item i.e. Item No. 11-A or B as the case may be and it is only the proper officer who is having jurisdiction over the respondent can classify the product and pass necessary orders in the matter. By doing so the Collector (Appeals) has exceeded his jurisdiction. This contention hardly requires any discussion because when the classification matter comes in appeal the Appellate Authority has to decide the matter and that is exactly what the learned Collector (Appeals) has done. It may be noted that in the present appeal only prayer is for declaration that the impugned order is not proper and legal but no other relief for classification is sought. We do not find it necessary to discuss various other contentions raised by Mr. Mehta. For the reasons stated we have dismissed the Appeal.