IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 6138 of 2001(E)
1. SOUTHERN REFINERIES LTD
... Petitioner
Vs
1. UNION OF INDIA
... Respondent
For Petitioner :SRI.ANTONY DOMINIC
For Respondent :SRI.THOMAS MATHEW NELLIMOOTTIL
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :09/02/2009
O R D E R
S.SIRI JAGAN, J.
==================
O.P.No. 6138 of 2001
==================
Dated this the 9th day of February, 2009
J U D G M E N T
The petitioner is engaged in the business of re-processing
de-graded lubricating oil and selling it. Till the year 2000, such re-
processing of de-graded lubricating oil was held not to involve a
manufacturing process by various decisions of the courts and
therefore, no excise duty was payable on the re-processed lubricating
oil manufactured by the petitioner. But by Finance Act 2000, Schedule
to the Central Excise Tariff Act, 1985 was amened by introducing a
Chapter Note to Chapter 27 thus:
‘9. In relation to lubricating oils and lubricating preparations of
heading No.27.10. Labelling or relabeling of containers and repacking
from bulk packs to retail packs or the adoption of any other treatment to
render the product marketable to the consumer shall amount to
“manufacture.”‘In the Central Excise Act the word “manufacture” is defined thus:
‘(f) “manufacture” includes any process,-
(i) incidental or ancillary to the completion of a manufactured
product; and
(ii) which is specified in relation to any goods in the Section or Chapter
notes of the First Schedule to the Central Excise Tariff Act, 1895 (5
of 1986) as amounting to manufacture,and the word “manufacture” shall be construed accordingly and
shall include not only a person who employs hired labour in the
production or manufacture of excisable goods, but also any person who
engages in their production or manufacture on his own account.’Thereafter, the Central Excise Department started taking the stand
o.p.6138/01 2
that in view of the Chapter Note added, the re-processing of de-graded
lubricating oil would also amount to manufacture on the ground that
the process is for making the product marketable and, therefore,
excise duty is payable by the petitioner. Ext.P1 order was passed in
that regard. The petitioner filed appeal before the Commissioner of
Central Excise and Customs (Appeals), which was dismissed by Ext.P2.
Although the petitioner filed appeal before the Customs Excise and
Service Tax Appellate Tribunal (CESTAT), Bangalore, as Appeal
No.E/164/2001, the petitioner chose to file this original petition to
challenge the constitutional validity of the Chapter Note introduced by
the Finance Act, 2000 since that could be done only in a writ petition.
However, the petitioner reserves their right to pursue that question in
a more appropriate case. They would be now satisfied with a direction
to the CESTAT, Bangalore, to dispose of appeal No.E/164/01
expeditiously. The learned Standing Counsel appearing for the Central
Excise Department is also keen to get the appeal disposed of since,
according to him, several crores of rupees are being held up because
of the pendency of similar appeals before various authorities and it
would be in the interest of the Department also to have the appeal
disposed of either way finally. In view of the consensuses of opinion, I
dispose of this original petition with a direction to the CESTAT,
o.p.6138/01 3
Bangalore, to dispose of Appeal No.E/164/2001, as expeditiously as
possible, at any rate, within three months from the date of receipt of
a certified copy of this judgment. The interim order passed in this
original petition shall continue to be in force till the appeal is disposed
of.
Sd/-
sdk+ S.SIRI JAGAN, JUDGE
///True copy///
P.A. to Judge
S.SIRI JAGAN, J.
=================
O.P.No. 6138 of 2001-E
=================
J U D G M E N T
9th February, 2009