I am directed to say that doubts have been expressed regarding eligibility of fat liquors for concessional rate of duty in terms of Notification No. 12/94-CE dated 1.3.94 as amended by Notification No. 14/95-CE dated 16.3.95.

2.     The matter has been carefully examined by the Board. Lubricating preparations containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, the oil being the basic constituent of the preparations, are classifiable under Sub-heading No. 2710.90 and attract 10% excise duty. However, lubricating preparations not containing 70% or more by weight of petroleum oils or oil obtained from bituminous minerals are classifiable under sub-heading No. 3403.00. Prior to 16.3.1995, goods falling under sub-heading No. 2303.00 attracted 20% excise duty whereas goods falling under sub-heading No. 2710.90 attracted 10% excise duty. In other words, the rate of duty payable on "lubricating preparations" depended upon the content of petroleum oils or oils obtained from bituminous minerals. As a measure of simplification and to avoid disputes of classification, lubricating preparations falling under sub-handing No. 3403.00 were also subjected to 10% excise duty w.e.f. 16.3.95 vide notification 14/95, which amended notification 12/94. In other words, Lubricating preparations falling either under sub-heading No. 2710.90 or 3403.00 would attract the same rate of excise duty of 10%.

3.     The heading No. 34.03 contains two categories of products:

(a)      Lubricating preparations; and 

(b)      Preparations of a kind used for the oil or grease treatment of textile materials, leather etc.

The rate of duty of 10% has been prescribed only on lubricating preparations falling under sub-heading No. 3403.00 and not on preparations of a kind used for the oil or grease treatment of leather.

4.     Fat liquors would seem to fall in the Second Category as preparations of a kind used in the oil or treatment of Textile. material leather etc. as fat liquoring in a process whereby oils are incorporated into leather, so that the leather attains the desired softness. The chemical test results of the impugned goods also reveal that they are composed of vegetable fatty oily, organic surface active agents and additives which find use as fat liquoring agent in the leather industry. Thus fat liquors would not be eligible for the concessional rate of duty of 10% buy would be chargeable to the tariff rate of 20%.

5.     In view of the above, it is clarified that fat liquors would be classified under heading 34.03 of CETA, 1985 as preparations of a kind used for the oil or grease treatment of textile materials, leather etc. However, these would not, be eligible for the benefit of Notification 12/94-CE as amended by 14/95-CE dated 16.3.95 and would be chargeable to the Tariff rate of 20%.

6.     All pending disputes/ assessments on the issue may be settled in the light of these guidelines.