ORDER
T.V. Sairam, Member (T)
1. Reliance Rasayan Pvt. Ltd. has filed this appeal challenging the order of the Commissioner (Appeals) dated 17.9.03.
2. The issue before us is whether the product manufactured by the appellant, Loma-finish-45, considered by them as lubricating preparation meant for textile materials is (a) classifiable under 3403.10 or under 3403.90 as classified by the Dept. and (b) whether it is eligible for exemption as contemplated under Notification No. 12/94-CE., dated 1.3.94 as amended by Notification No. 14/95-C.E., dated 16.3.95 and as claimed by the appellants.
3. Sr. No. 5 of the said Notification reads as follows:
3403.00 Lubricating preparations 10% ad valorem
Chapter Heading No. 34.03 reads as follows:
Lubricating preparations (including cutting-oil preparations, bolt or nut release preparations, anti-rust or anti-corrosion preparations and mould release preparations, based on lubricants) and preparations of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials, but excluding preparations containing, as basic constituents 70% or more by weight of petroleum oils or of oils obtained from bituminous minerals.
4. In the impugned order, the Commissioner (Appeals) had held that the disputed product cannot be considered as lubricating preparation as the same is covered under “preparation for the lubricating, oiling, or greasing of textile material”. Thus, he has held that though classifiable under 3403.00 the product in question is not eligible for benefit under Notification No. 12/04 as amended by Notification No. 14/95, as it is not a “lubricating preparation”.
5. According to the appellants, the product is “lubricating preparation”, very much covered under Notification No. 12/94 as amended by Notification No. 14/95 as it also falls under sub heading 3403.10. To support their contention they rely upon the following citations:
(1) Commissioner of Central Excise Madurai v. Chennai Inorganics Ltd. reported in 2002 (150) E.L.T. 552.
(2) Commissioner of Central Excise Chennai v. Balmer Lawrie and Co. Ltd. reported in 2002 (149) E.L.T. 174 (Tri.-Chennai)
The sample is in the form of light yellow coloured oily liquid. It is composed mainly of organic surface active agent with small amount of mineral oil. Such composition is mentioned in HSN under 34.03 (G).
Sample used up,
7. Further, he tries to distinguish the two distinct components perceivable in the description under 3403.10 and 3403.90. He draws our attention to the HSN explanatory notes in respect of 3403 (G), which reads:
(G) Preparations for the lubricating, oiling or greasing of textiles, leather, hides, furskins’ etc. These may be used to lubricate or soften textile fibres during spinning to “stuff” leather, etc. They include, for example; mixtures of mineral oil or fatty substances with surface active agents (e.g. sulphorici-noleates); water dispersible textile lubricating preparations containing a high proportion of surface active agents together with mineral oils and other chemicals.
8. A perusal of the above explanatory notes indicates that while carving out the sub-heading 3403.10 in the Tariff, the explanatory notes relating to 3403(A) 2(F) have been taken into account so as to include them and as a consequence the contents of explanatory note 34,03(G) falls under 3403.90. As a results, the product in question which has been accepted by the chemical examiner as preparation for the lubricating oiling or greasing and textile, etc.” has to be invariably brought under Chapter heading 3403.90. In consequence, the product will not be eligible for exemption, contemplated under Notification No. 12/94 as amended by Notification No. 14/95.
9. The ld. Counsel for the appellants however brings to our notice the ratio adopted by this Tribunal in the case of Refnol Resins & Chemicals Ltd. v. Commissioner of Central Excise, Ahmedabad as . While going through a similar issue, this Tribunal had an occasion to observe thus:
A perusal of the Tariff Heading clearly reveals that the Heading covers two products, namely, (1) lubricating preparations, and (2) preparations of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials. The product in question is textile softener which is used for softening of textile fibres. No material has been brought on record by the Appellants to show that the product in question is a lubricating preparations. The appellants have placed reliance on the Chemical Examiner’s report which merely states that the product find use to lubricate/soften textile fibres during spinning. We agree with the learned SDR that nowhere the Chemical Examiner has opined that the textile softener manufactured by the Appellants is lubricating preparations. In fact a reading of the Chemical Examiner’s report goes to show that the textile softener in question is a preparation of a kind used for the oil or grease treatment of textile materials, leather, furskins or other material which is a second product covered by Heading No. 34.03. This is also apparent from the Explanatory Note of HSN wherein it has been mentioned that “the preparations for lubricating, oiling or greasing of textiles, leather, hides or furskins, etc. These may be used to lubricate or soften textile fibres during spinning to “stuff” leather, etc. They may include, for example, mixtures of mineral oil or fatty substances with surface-active agents (for example, sulphoricinoleates); water dispersible textile lubricating preparations containing a high proportion of surface-active agents together with mineral oils and other chemicals, Notification No. 12/94-CE does not provide a concessional rate of duty in respect of all the products covered by Heading No. 34.03. The notification is applicable only to “lubricating preparations” and not to the other preparations mentioned in Heading No. 34.03.
10. In view of the above, we do not agree with the contention of the appellants and we do not find any reason to interfere with the classification arrived at by the Revenue. At the same time, we are not in agreement with the authorities below in respect of penal provisions invoked by them, we are emphatic that imposition of penalty is not warranted in cases where classification is the issue. We, therefore, set aside the penalties imposed on the appellants by the lower authorities in toto.
11. The appeal is disposed of accordingly.
(Dictated and pronounced in open Court on 1.3.2006)