Mixing of Thermol and Mixed Oil doesn’t change nature of product, attracts 32% Excise Duty: CESTAT [Read Order]

In a significant case, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has observed that  Mixing of Thermol and Mixed Oil doesn’t change the nature of the product and attracts 32 % of Excise Duty which need to be considered elaborately by the adjudicating authority,

Shah Petroleums, the appellant whether Super Mix Oil (first final product) is classifiable under CET 27101990 as claimed by the appellant or under CET 27101190 as claimed by the department and Super C-9 Plus (second final product) is classifiable under CET 27079900 as claimed by the appellant or under CET 27101190 as claimed by the department.

It was submitted by the assessee that for the Super Mix Oil (CET 27101990 Vs. 27101190), the Appellant had procured mixed oil from IPCL, Dahej and IPCL, Nagothane respectively. While IPCL, Dahej classified the mixed oil under CET 27101190 charging excise duty @32%, IPCL, Nagothane classified the mixed oil under CET 27101990 charging excise duty @ 16%.

The Appellant added multifunctional additives, i.e. Thermol and cleared the same on payment of duty @ 16% under CET 27101990 after availing of cenvat credit.

The Department’s contented that there is no change in the basic characteristics and structure of the raw materials by adding Thermol and that the raw material characteristics have remained the same in the finished product, the final product attracts the Central Excise Duty @ 32%.

A Coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) observed that the classification will come into the picture only once the manufacturing was established. It was evident that the department itself contended that by the entire process of mixing thermol and mixed oil and any other product and thermol and C-9 Plus, there is no change in the product.

The Tribunal viewed that this aspect needs to be considered elaborately by the adjudicating authority and it was not clear that the department has applied the classification of 27101190 on the basis that the input falls under the same CTH and due to no change like the product, the classification will remain same. 

The Tribunal found that once a case was made out against the partnership firm, no separate penalty can be imposed on the partner of such firm and set aside the impugned order while allowing the appeal.

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