V.K. Agrawal, Member (T)

1. The issue involved in this appeal, filed by M/s. Bharat Petroleum Corporation Ltd. is whether the benefit of exemption Notification No. 120/84-Central Excise, dated 11-9-84 is available to the product lubricating oils, namely, Cabols, univols, Ecols and Osmex-140.

2. Dr. Debi Pal, ld. Senior Advocate, submitted that the Appellants manufactured various grades of lubricating oils including products mentioned above; that these products were manufactured by straight blending of mineral oils; that they had classified these products under sub-heading 2710.99 of the Schedule to the Central Excise Tariff Act and claimed exemption under Notification No. 120/84-CE., which exempted blended or compounded lubricating oils and greases provided the appropriate duty of excise had been paid on the mineral oils; that the products in question in fact fall under sub-heading 2710.60 of the Tariff; that the Appellate Tribunal in Order No. A-1134/KOL/2001 dated 15-10-2001 [2002 (140) E.L.T. 175 (T)] had observed, after referring to sub-heading 2710.60, that "the plain reading of this Tariff description would indicate to us that all oils which are ordinarily used for lubrication, with a flesh point equal to or above 94 degree centigrade should be classified under this Tariff Heading. The word "ordinarily" appearing in this entry cannot be ignored for the purposes of classification. It cannot be understood to mean "universally" or "without exception" as is being proposed by the Revenue in this case." The ld. Sr. Counsel contended that the impugned products are ordinarily sold as lubricants and are used also directly as lubricants and as such goods are ordinarily known as lubricants. He also referred to the Boards Circular No. 562/58/2000-CX, dated 8-12-2000 wherein the Board has clarified that the words "ordinarily used" do not lend themselves to the interpretation that they should be exclusively used for that particular purpose. The words "ordinarily used" presupposes a variety of uses. When any goods are said to be used ordinarily for a particular purpose, it automatically implies that the goods have other uses, and the most common is the use, which is specified". Reliance has also been placed on the decision in the case of Kailash Chandra v. Union of India. : AIR 1961 SC 1346 [LQ/SC/1961/120] wherein it has been held that "ordinarily" means "in the large majority of cases, but not invariably". Reference has also been made of the decision in the case of Somany Pilkingtons Ltd. v. B.P. Verma (Director of Publications), 1995 (76) E.L.T. 281 (Delhi). Finally the ld. Sr. Counsel for the appellants mentioned that the products in question, being obtained by straight blending of mineral oils are squarely covered by the wordings of the Notification.

3. Countering the arguments, Shri N.C. Roy Chowdhary, ld. Senior Advocate, submitted that the Tribunal, vide Order dated 15-10-2001 had referred the matter to the Larger Bench of the Tribunal to determine the exact scope of coverage of Notification No. 120/84-C.E.; that the Larger Bench, vide Misc. Order No. 12/2002-C, dated 25-2-2002,2002 (141) E.L.T. 637 (T-LB) has observed that the issue could be resolved by reaching a finding as to (i) whether the impugned products satisfy the definition contained in the Notification and (ii) whether the goods are ordinarily used as lubricants; that the Appellants had cleared the goods for manufacture of other products and paid Sales Tax at a lesser rate and this fact establishes that the impugned products are not ordinarily used as lubricating oil; that the impugned goods had been assessed under sub-heading 2710.99 and as such they themselves had not treated the impugned goods as lubricating oils; that it is not open to them now to turn around and classify these products under sub-heading 2710.60 of the Tariff. The learned Sr. Counsel for the Revenue, further, submitted that the Notification No. 120/84-C.E. provides exemption from payment of duty to a particular variety of lubricating oil which satisfy the conditions stipulated in the Notification; that there is no evidence brought on record to show that the products falling under sub-heading 2710.99 satisfy the conditions specified in the Notification.

4. We have considered the submissions of both the sides. The Notification No. 120/84-CE., reads as under:

"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts blended or compounded lubricating oils and greases, that is to say, lubricating oils and greases obtained by straight blending of mineral oils or by blending or compounding of mineral oils with any other ingredients, from the whole of the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944):

Provided that such blended or compounded lubricating oils and greases are produced out of such mineral oils on which appropriate duty of excise leviable under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) or the additional duty of Customs leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), has been paid.

Explanation - For the purposes of this notification, all stocks of mineral oils obtained by a manufacturer for producing lubricating oil and greases, except such stocks as are clearly recognisable as being non-duty paid, shall be deemed to have discharged appropriate duty of excise leviable under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) or the additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975)".

5. It is apparent from the wordings of the Notification that it exempts blended or compounded lubricating oils obtained by straight blending of duty paid mineral oils or by blending or compounding of mineral oils with any other ingredients. The Appellants have claimed that the impugned products are blended and compounded lubricating oils and as such are exempted from payment of duty in terms of the Notification. It has been mentioned by them that all the products are manufactured by them by blending duty paid base mineral oils. The Revenue has not rebutted the process of blending of base mineral oils for getting the impugned products. The Revenues only contention is that as per sub-heading 2710.60 Lubricating oil is that oil which is ordinarily used for lubrication, excluding any hydrocarbon oil which has its flash point below 94C and since the impugned products were sold to manufacturers at a concessional rate of Sales Tax @ 2% as against 11% charged to dealers/users of the products. It is also the contention of the Revenue that the impugned goods have not been classified under sub-heading 2710.60, these are not lubricating oils to which exemption has been granted under Notification No. 120/84-CE We find force in the submissions of the Appellants that as these products are blended or compounded lubricants, the specifications mentioned in the Notification are satisfied, sub-heading 2710.60 covers only those lubricating oils which are having flash point 94C or above. The other lubricating oils would be classifiable under sub-heading 2710.99 as "Others". The phrase "that is to say" used in sub-heading 2710.60 has been interpreted to be the words of limitation by the Supreme Court in the case of Royal Hatcheries Pvt. Ltd. v. State of A.P., 1994 (53) ECR 200 (S.C). The fact that sub-heading 2710.60 covers an exclusion clause goes to support the case of the Appellants that there may be other Lubricating oils which may fall in the residuary Heading "Others". It is also significant to note that Notification No. 120/84-CE. exempts lubricating oil without mentioning any Tariff Heading/sub-heading. It means that all lubricating oils, which satisfy the conditions specified in the Notification, would be eligible for the exemption provided therein. As the Appellants have complied with the wordings of the Notification and it is also not the case of theDepartment that mineral oils used for blending or compounding lubricatingoil were not duty paid, the benefit of Notification will be available to the Appellants. The question of examining the aspect of "Ordinarily used does not arise as the impugned products were classified under sub-heading 2710.99where no such words have been used. Thus the benefit of Notification No.120/84-C.E. is available to the impugned products. The Appeal is thus allowed.