ORDER
P.K. Kapoor, Member (T)
1. These appeals have been filed against the order dated 25-1-1991 passed by the Additional Collector of Customs, Kandla. Initially a joint appeal was filed by the two appellants. On being advised on 18-11-1992 to file a separate appeal M/s Gujarat State Export Corporation Ltd. have also filed an appeal and have also prayed for cpndona-tion of delay. Since the joint appeal was filed within the statutory time limit we condone the delay in the filing of the appeal. Since the appeals arise out of a single order they are disposed of by this common order.
2. Briefly stated the facts of the case are that a Bill of Entry No. F-4796 dated 20-9-1990 was filed on behalf of M/s. Gujarat State Export Corpn. Ltd., Ahmedabad, A/c. Ganesh Oil Industries at Kandla for the clearance of goods declared as “Waste Oil”. On the basis of the invoice dated 10-7-1990 issued by M/s. Orchid General Trading, Dubai, the CIF value of the goods was declared as Rs. 1,19382/-. The goods were claimed as covered by the Open General Licence in terms of Item No. 1(3) of Appendix 6 of the Import and Export Policy for the period April-March, 1990-93. The assessment of the goods was claimed under Heading 3823.90 of the CTA, 1975 read with Notification No. 47/90-Cus. and under Heading 2710.99 of the CET for levy of countervailing duty. The scrutiny of the relative Import General Manifest and Bill of Lading revealed that the goods were initially described in the shipping documents as “Used Lube Oil (Waste oil)” but subsequently at the instance of the importers the suppliers amended the description of the goods to read as “Waste Oil”.
2A. After examination of the goods, samples were drawn for test. In the report dated 1-11-1990 furnished by the Customs House Laboratory certified that it was a black coloured liquid having mineral oil content exceeding 70% by weight and flash point exceeding 94°C. It was also certified that it had characteristics of “Lubricating oil” in terms of the criteria laid down in the Tariff. Having regard to the result of the chemical test the Department felt that the goods were classifiable under Heading 2710.00 of CTA, 1975 read with Notification No. 35/90-Cus. and Heading 2710.60 of CET and not under Heading 3823.90 as declared by the importers. It was also felt that being “Used Lubricating oil” the goods were covered by Entry No. 174 of Appendix 2, Part-B, and not under OGL in terms of Item 1(3) of Appendix-6 of the Import & Export Policy 1990-93 as claimed by the importers. The appellants and M/s. Gujarat State Export Corporation Ltd. were, therefore, served with the show cause notice dated 15-11-1990 and thereafter by the impugned order the Additional Collector held that the goods were classifiable under Heading 2710.00 of the CTA, 1975 and Heading 2710.60 of the Central Excise Tariff. He also ordered the confiscation of the goods under Section lll(d) of the Customs Act, but gave the option for redemption of goods on payment of a fine of Rs. 60,000/-. A penalty of Rs. 20,000/- was also imposed on the appellants under Section 112(a) of the Customs Act, 1962.
3. On behalf of the appellants the learned Consultant Shri D.L. Vyas appeared before us. He stated that the appellants were disputing the finding of the adjudicating authority that for the purpose of levy of countervailing duty the imported “Waste oil” was classifiable under Heading 2710.60 of the Central Excise Tariff. He contended that the finding was based on the observations of the Chemical Examiner who had concluded that the sample was of “Lubricating oil” in terms of the criteria laid down in the Tariff merely on the grounds that the oil contained in the sample was slippery to touch. He argued that under these circumstances and also for the reason that the Chemical Examiner had not been able to determine the actual use, method of manufacture and source of the imported product, the finding that the goods were classifiable as “Lubricating oil” under Heading 2710.60 of the Central Excise Tariff is not sustainable. He referred to copy of the test report at page 54 of the paper book which shows that the mineral oil content in the sample is only 14.61% and contended that this report had been deliberately ignored by the adjudicating authority. He argued that the test reports given by the Chemical Examiner were not reliable in view of the wide variation in the findings in regard to the mineral oil content in the samples drawn from the same consignment. He contended that under these circumstances as claimed by the appellants the goods were classifiable under Heading 2710.99 of the Central Excise Tariff. Continuing his submissions Shri Vyas submitted that the Additional Collector’s finding that for Import Trade Control purposes the goods were covered by Entry No. 174 of Appendix-2 Part-B of the Import Policy was also erroneous since that entry has to be held as relating to only Iron and Steel products by virtue of the definition of ‘defective’ and ‘Scrap’ given under para 26 Chapter II of the relevant policy. He added that the prohibition in terms of sub-clause (l)(iii) of Clause 5 of the Import (Control) Order 1955 was also not applicable to the disputed goods since the requirement of ‘newness’ in the case of mineral oils is irrelevant. He argued that the appellants being actual user the imported oil had to be deemed as covered by the Open General Licence in terms of Sr. No. l(iii) of Appendix 6 of the Import Policy since it was not covered by any entry in Appendices 2, 3, 5, 6 (List 8) and Appendix 8. He stated that penal action taken against the appellants was unjust and unreasonable since clearance of waste oil was being allowed regularly by Kandla Custom House.
4. On behalf of the Department the learned JDR Shri L.N. Murthy stated that the appellants claim that the imported goods were classifiable under Heading 2710.99 for the purpose of countervailing duty was not tenable since they were not contesting the classification of the goods under Heading 2710.00 of the Customs Tariff which corresponds to Heading 2710.60 of the Central Excise Tariff. He added that having regard to the mineral oil content and flash point of the sample tested by the Custom House Laboratory and the finding of the Chemical Examiner that it could be deemed as “Lubricating oil” in terms of criteria laid down in the Tariff, the goods were correctly held as classifiable under the specific Heading 2710.00 of the Customs Tariff and the corresponding Heading 2710.60 of the Central Excise Tariff for the purpose of levying countervailing duty. He stated that under these circumstances the appellants’ claim that the goods in question were classifiable under the residuary entry 2710.99 has no force at all. He also stated that the test report showing mineral oil content of only 14.61% filed by the appellants has to be ignored since the appellants had not referred to it during the proceedings before the Additional Collector. The learned JDR added that the appellants’ contention that the disputed goods were covered by the Open General Licence has also to be rejected since as held by the Additional Collector the goods were covered by Sr. No. 174 of Appendix 2 of Part-B of the Import Policy and in terms of conditions of Clause 3(2) of the Imports & Exports (Control) Order, 1955 it was permissible to import only new goods in terms of the OGL which had also to be treated as an Import Licence. He pleaded that under these circumstances and also in view of the fact that the appellants had arranged for the deletion of the words “Used Lube oil” in the import documents, their appeal merits rejection.
5. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that in this case only the following points arise for consideration :-
(i) Whether for the purpose of levy of countervailing duty the imported “Used Lubricating oil (waste oil)” was classifiable under Heading 2710.60 of the Central Excise Tariff or under the residuary Heading 2710.99.
(ii) Whether in terms of Serial No. 174 of Appendix 2, Part-B of the relevant Import Policy and condition No. 5 of Clause 3(2) of the Imports and Exports (Control) Order the import of “Used Lubricating Oil (Waste oil)” in question without a specific licence has to be deemed as having been imported in contravention of clause 3 of the Imports (Control) Order, 1955 and Section 3 of the Imports and Exports (Control) Act, 1947.
6. In order to appreciate the rival contention on the question of classification of the imported goods under the Central Excise Tariff for the purpose of C.V. duty, we consider it desirable to reproduce below the relevant entries oJ the Central Excise Tariff :
_______________________________________________________________________________
Heading Sub-heading Description of goods
No. No.
_______________________________________________________________________________
1 2 3
_______________________________________________________________________________
27.10 Petroleum oils and oils obtained from
bituminous materials, other than crude;
preparations not elsewhere specified,
or included; containing by weight 70%
or more of petroleum oils or oils
obtained from bituminous minerals;
these oils being the basic
constituents of the preparations.
2710.60 Lubricating oil, that is to say any oil
as is ordinarily used for lubrication
excluding hydro-carbon oil which has
its flash point below 94°C.
...
...
2710.99 Other
_______________________________________________________________________________
It is seen that in the Bill of Entry the appellants had declared the imported goods as “Waste oil”. However, in the original import documents which were substituted at the instance of the importers, the suppliers had described the goods as “Used Lube Oil (Waste Oil)”. It is, therefore, evident that the imported goods were nothing but “Used Lubricating Oil” which is generally re-cycled or refined for use as lubricating oil in motor-vehicles and other machines. From the impugned order we find that a representative sample drawn from consignment was tested by the Custom House Laboratory and the report dated 1-11-1990 given by Chemical Examiner read as under :-
“Sample is dark black coloured liquid. It is composed of Mineral Oil, Carbonaceous matter etc. It flashes above 94°C. (The Mineral oil contents in the sample is more than 70% by weight.) It is free from water.
Note: The only portion is slippery to touch and has characteristics of “Lubricating oil” as per tariff criteria. In addition to its actual uses, the method of manufacture/source of obtaining the product u/r may be ascertained if felt necessary.”
7. On a plain reading of the test report furnished by the Chemical Examiner, it follows that the mineral oil content of imported goods was in excess of 70% by weight and its flash point was over 94 C. It is also seen that the Chemical Examiner had certified that the goods had the characteristics of “Lubricating oil”. Under these circumstances in our view the goods have to be deemed as covered by the specific Heading 2710.60 of the Central Excise Tariff in preference to the residuary Heading 2710.99. Apart from the fact that the Chemical Examiner had certified that the disputed goods had the characteristics of “Lubricating oil”, as observed by the adjudicating authority, in the original import documents which were substituted at the instance of the importers, the suppliers had described the goods as “Used Lube Oil (Waste oil)”. It is evident that the imported oil continued to fall in the category of “Lubricating Oil” even though it had been used. Under these circumstances we find no force at all in the appellants’ argument that goods were not classifiable under Heading 2710.60 of the Central Excise Tariff since the Chemical Examiner had not been able to indicate the actual use of the imported goods. In this regard another point raised by the appellants is that the test report furnished by the Custom House Laboratory could not be relied upon since there was another report which showed that the mineral oil content of the sample tested was only 14.61%. We are, however, unable to take any note of this report since the appellants had neither contested the test report which was relied upon by the adjudicating authority either by asking for re-test of the sample drawn from the consignment or on the basis of any other report showing mineral oil content of the goods as only 14.61%.
8. In view of the above discussion we do not find any reason to differ with the finding in the impugned order that for the purpose of levy of countervailing duty the imported “Used Lubricating oil (Waste oil)” was classifiable under Heading 2710.60 of the Central Excise Tariff.
9. As regards the second point, we find that condition No. 5 of clause 3(2) of the Imports and Exports (Control) Order provides that the goods to be imported against an Import Licence shall be new goods. Before the adjudicating authority, the appellants had contended that they had imported the disputed goods under OGL No. 1 of the Import Policy for the period April-March, 1990-93. It is seen that clause 23 of O.G.L. No. 1 of the said Policy permits the importation of the lubricating oils valued upto Rs. 50,000/- on a no objection from the IOC. The appellants had further contended that the value limit of Rs. 50,000/- was not applicable in their case since they had imported waste oil and not lubricating oil. As held by us, on the basis of the description of the goods in the import documents which were initially received from the suppliers and also on the basis of the report of the Chemical Examiner the disputed goods have to be treated as “Used Lubricating Oil”. It is common knowledge that used lubricating oil even without refinement can be used for applications such as oiling of ordinary machines for providing lubrication in order to reduce friction between moving parts and after refinement it can be used as engine oil in automobiles. It is seen that in his test report the Chemical Examiner had also certified that the imported oil had the characteristics of “Lubricating oil”. Hence, there is no force at all in the appellants’ contention that the imported goods have to be termed only as “Waste Oil” and not “Used Lubricating Oil”.
10. Under these circumstances we are inclined to agree with the findings of the adjudicating authority that the import of disputed “Used Lubricating Oil” was not permissible under OGL No. 1 of the Import Policy for the period April-March, 1990-93 which permitted the import of lubricating oil only upto a value of Rs. 50,000/- on a no objection from IOC. We, therefore, do not find any infirmity in the Additional Collector’s order that the imported goods which were not covered by a valid Import Licence had to be deemed as having been imported in contravention of Section 3(2) of the Imports and Exports (Control) Act rendering them liable to confiscation, under Section lll(d) of the Customs Act, 1962. In view of this finding we do not consider it necessary to examine whether the imported goods could also be treated as defective/scrap materials in terms of Sr. No. 174 of Appendix 2, Part-B of the Import Policy for the period April-March, 1990-93.
11. It is seen that the appellants had arranged for the substitution of the original import documents which described the imported goods as “Used Lubricating Oil (Waste Oil)” by new documents describing the imported goods only as “Waste Oil” with objective of misdeclaring the goods in the Bill of Entry. Under these circumstances we do not find any force in the appellants’ claim that the penalties of Rs. 20,000/- and Rs. 10,000/- imposed on the importer and the agent respectively are unfair and unwarranted.
12. In view of the foregoing the appeals are dismissed.