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Case Law Details

Case Name : Alicid Organic Industries Limited Vs C.C.E (CESTAT Ahmedabad)
Appeal Number : Excise Appeal No.11487 of 2017
Date of Judgement/Order : 02/08/2022
Related Assessment Year :
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Alicid Organic Industries Limited Vs C.C.E (CESTAT Ahmedabad)

Held that the process of cleaning of waste oil to yield reclaimed fuel oil does not amount to manufacture as defined under Section 2(f) of the Central Excise Act, 1944 not liable to duty.

Facts-

Appellant are engaged in the Re­cycling/ refining of Waste Oils/ Sludge. Appellant procured sludge/waste oil from vessels arriving from major ports Kandla, Mundra and Ship Breaking yard, Bhavanagar and also from M/s GSPC, M/s Cairn Energy and M/s Focus Energy. After procuring the said goods Appellant carried out processes like vacuum distillation, filtration, heating and centrifuging and other process to produce Re-usable Fuel Oil and Re-refined used oil. The Fuel oil so produced by Appellant is being sold to traders and consumers in open market as Re-Cycled Fuel Oil /Re-Cycled Industrial Fuel Oil and Re-refined Lube Oil without payment of Central Excise Duty. Appellant’s unit was visited by the officers and during the search proceedings, samples of finished products viz., Recycle Waste Oil and Re-refined Used Oil were withdrawn and same were sent for testing to the Chemical Examiner, Central Excise & Customs Laboratory, Vadodara. In his Test Reports, the Chemical Examiner has categorically stated that the samples of Recycled Waste Oil meet the parameter of Fuel Oil as prescribed under IS “1953”. Similarly, in case of sample of Refined Used Oil, the same confirms to the parameters of Lubricating Oil. Statement of Shri Manish C. Patel, Director of Appellant was also recorded by the department.

According to department, Appellant’s processes amounts to manufacture and the recycled fuel oil is appeared to be classifiable under Central Excise Tariff Heading No. 27101990 and Appellant is liable to discharge the Central Excise duty. Accordingly, a show cause notice dated 05.07.2016 was issued to the appellants, inter alia, proposing demand of Central Excise duty with interest and also imposition of penalty under Section 11AC of the Act and under Rule 25 of Central Excise Rules, 2002. After due process of adjudication, the adjudicating authority vide impugned order dated 11-5-2017 confirmed the proposed demand and also imposed equal penalty under Section 11AC of the Central Excise Act, 1944. He also imposed penalty under Rule 25 of Central Excise Rules, 2002 and penalty on Shri Manish C. Patel under Rule26 of Central Excise Rules, 2002. Hence, against the said order, the appellants are before us.

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