ORDER
M.V. Ravindran, Member (J)
1. This appeal is filed by the revenue against order in appeal dated 26/05/2004 which allowed the appeal of the respondents.
2. The relevant fact that arise for consideration are the respondent availed modvat credit on lubricating oil which is used by them in their DG set. After sufficiently using the DG set, the used lubricating oil is drained out and cleared from the factory as waste oil. The lower authorities issued show cause notice to the respondent demanding duty on such waste oil on the ground that this waste oil fall under Chapter subheading No. 34.03. The respondent resisted the show cause notice on the ground that these waste oil were not produced out of any manufacturing process. Adjudicating authority confirmed the demand. On an appeal, the Commissioner (Appeal) set aside the order in original on the ground that the waste oil is not produced by any process of manufacturing. Hence this appeal by the revenue.
3. Learned DR submits that the waste oil, which is drained out of DG set, is nothing but in course of manufacture. It is his submission that the waste oil is nothing but used lubricating oil and the respondents had availed modvat credit on the lubricating oil as an input. Hence, it is the submission that these waste oil would get covered under Chapter Subheading No. 34.03 as arising out of manufacture.
4. The authorized representative appearing on behalf of the respondents submits that the issue is squarely covered by the decision of Hon’ble Supreme Court in the case of Commissioner of Central Excise, Chandigarh-I v. Markfed Vanaspati & Allied Industries as reported at 2003 (153) E.L.T. 491 (S.C.) and in the case of Vikrant Tyres Ltd. v. Commissioner of Central Excise, Mysore as reported at .
5. Considered the submissions made by both sides and perused records. It is not in dispute that the waste oil, which is cleared by the respondent, is emerging after the use of lubricating oil in the DG set and the said oil could not be reused as lubricating oil. I find that the department’s contention for dutiability is solely based on the fact that the classification of such waste oil changes from Chapter 27 to Chapter 34.03 and Sub-heading 34.03 attracts duty hence all the clearances of the waste oil will get covered under Chapter 34.03 and liable to duty is misconceived. To my mind, this proposition goes totally in tangent, to the law settled by the Hon’ble Supreme Court in the case of Markfed Vanaspati & Allied Industries. In that case, the Hon’ble Supreme Court in their judgment at para ‘6’ has observed as under:
It is not possible to accept the contention that merely because an item falls in a Tariff Entry it must be deemed that there is manufacture. The law still remains that the burden to prove that there is manufacture and that what is manufactured is on the revenue. In this case no new evidence is placed to show that there is manufacture.
6. Accordingly, to my mind, the issue involved in this case is squarely covered by the judgment of the Hon’ble Supreme Court in the favour of the respondent.
7. In view of the facts and circumstances, as mentioned above, respectfully following the judgment of the Hon’ble Supreme Court in the case of Markfed Vanaspati & Allied Industries and I do not find in the merits appeal filed by the revenue and the same is liable to be dismissed. Appeal dismissed.
(Dictated and pronounced in the open court)