1983 (4) TMI 289 - AT - Central Excise

Issues Involved:
1. Classification of Extra Hardened Technical Hard Oil (HTO)
2. Applicability of Tariff Item (T.I.) 12, T.I. 13, or T.I. 68 of the Central Excise Tariff (CET)
3. Distinction between hydrogenation as processing or manufacturing
4. Precedent and binding nature of previous decisions

Detailed Analysis:

1. Classification of Extra Hardened Technical Hard Oil (HTO):

The appellants filed a classification list for HTO, claiming it under T.I. 68 of the CET. The Assistant Collector of Central Excise, Bombay, provisionally approved the classification under T.I. 13, which was later confirmed. The appellants disagreed and sought provisional assessment under T.I. 12, which was allowed. The Collector of Central Excise (Appeals), Bombay, held that the product could not be classified under T.I. 12 or T.I. 13, thus partially allowing the appeal. The appellants then filed a revision application before the Government of India, which was transferred to this Tribunal.

2. Applicability of Tariff Item (T.I.) 12, T.I. 13, or T.I. 68 of the Central Excise Tariff (CET):

Shri D.N. Mehta, representing the appellants, argued that T.I. 12 covers Vegetable Non-essential Oils (V.N.E.O.), and HTO, obtained by hydrogenation, should fall under this item. He contended that hydrogenation does not convert palm oil into a new product but merely improves its quality, maintaining its essential characteristics.

On the other hand, Smt. Vijay Zutshi, representing the respondent, argued that HTO is recognized in the trade as a distinct commodity from Vegetable Oils, suitable only for specific industrial uses, and should be classified under the Residuary Item 68.

3. Distinction between Hydrogenation as Processing or Manufacturing:

Shri Mehta argued that hydrogenation is merely a processing step and not manufacturing, thus HTO should be classified under T.I. 12. He cited various precedents, including M/s. Tungabhadra Industries Ltd. v. The Commercial Tax Officer, Kurnool, and others, to support his contention.

The Tribunal, however, referred to the Government of India's decision in Hindustan Lever Ltd., which held that hardened oils with a melting point above 45^0C are distinct from Vegetable Oils and should be classified under T.I. 68. This decision also distinguished the Tungabhadra case, emphasizing that hydrogenation is considered a manufacturing process.

4. Precedent and Binding Nature of Previous Decisions:

The Tribunal noted that while the Government of India's decisions are not binding, they carry persuasive force. The Tribunal would be slow to disturb such decisions unless there is a judicial decision against them or they are manifestly wrong. The Tribunal agreed with the Government of India's reasoning and the Gujarat High Court's decision in Navasari Oil Products Ltd., which classified super-hardened oil not fit for human consumption under T.I. 68.

The Tribunal concluded that HTO, not fit for human consumption, is recognized as a distinct commodity and cannot be classified under T.I. 12. It should be classified under T.I. 68.

Conclusion:

The Tribunal upheld the lower appellate authority's order classifying Extra Hardened Technical Oil (HTO) under T.I. 68 of the Central Excise Tariff, dismissing the appeal. The Tribunal emphasized the importance of adhering to precedents and the persuasive value of the Government of India's decisions, reinforcing the classification of HTO under the residuary item T.I. 68.

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