1996 (1) TMI 373 - AT - Central Excise

Summary

Issues: Classification of bleached and neutralised oil described as Palm Stearine under Tariff item No. 12 or T.I. 68 of the Central Excise Tariff Act.

The judgment revolves around the classification of a product declared as Palm Stearine in the classification list. The key issue is whether this product should be classified under Tariff item No. 12 or T.I. 68 of the Central Excise Tariff Act. The appellant argued that the product was actually Olein part of Palm Oil, not Palm Stearine, as some quantity of Olein part adhered to the crude stearine imported. The Assistant Collector initially approved the classification under Tariff item 12, but later issued a show cause notice proposing a change to Tariff item 68, claiming the product was a fraction oil obtained through fractionation, not a V.N.E. oil. The appellant contended that they were not adequately informed of this ground and were not given a chance to provide evidence. The judgment highlights the importance of natural justice principles and remands the matter for a fresh decision, emphasizing the need for a fair opportunity to present evidence and be heard.

The appellant's argument focused on the nature of the product, asserting that it was only the olein part of Palm Oil, not stearine. They claimed that the product was mistakenly declared as Palm Stearine when it was actually sold as a cooking medium. The appellant cited a relevant case to support their classification under Tariff item 12. On the other hand, the respondent argued that the classification list identified the product as fully Neutralised and Bleached Palm Stearine, not Palmolein, and referenced a case to differentiate between Palm stearine and Palm oil. The judgment notes that the appellants were asked to show cause against the proposed classification change, which was based on the product being a fraction oil obtained through fractionation, not satisfying the characteristics of V.N.E. oil under Tariff item 12.

The judgment delves into the classification criteria, distinguishing between V.N.E. oils and Essential oils, emphasizing that V.N.E. oils are derived from vegetable origin and extracted mainly through a mechanical procedure, while the stearine in question was obtained through the process of fractionation. The Assistant Collector's order highlighted the lack of physical and functional properties of V.N.E. oil in the disputed product. The judgment also criticizes the lack of findings by the Assistant Collector on whether the product described as Palm stearine was indeed part of Palm oil, as contended by the appellants. It points out procedural errors, such as inadequate notice and misinterpretation of the appellants' response by the Collector (Appeals), leading to a violation of natural justice principles. Consequently, the judgment sets aside the impugned order and remands the matter for a fresh decision, emphasizing the importance of disclosing all evidence and providing a fair hearing to the appellants.