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Clarification regarding eligibility of Fat Liquors for concessional rate
of duty in terms of Notification No.12/94-CE, as amended by 4/95-CE.
Circular
No. 175
dated 14th February 1996
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.
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