1984 (6) TMI 233 - AT - Central Excise

Summary

Issues:
1. Classification dispute between hydrogenated rice bran oil for human consumption under item 12 or item 68, CET.

Analysis:
The judgment by the Appellate Tribunal CEGAT New Delhi involved a classification dispute regarding hydrogenated rice bran oil's assessability under item 12 or item 68, CET. The Govt. of India issued a notice challenging the Appellate Collector's decision and sought to set aside the order-in-appeal and restore the Assistant Collector's order. The dispute centered around whether the oil, with a melting point of 52oC and deemed unfit for human consumption, should be classified under item 12 or item 68. The Government argued that the oil should be assessed under item 68, citing a Gujarat High Court ruling and Supreme Court precedents. The Government contended that once the oil is hydrogenated beyond a point, it should be assessed under item 68 as it no longer fits any specific item category.

The factory's Counsel argued that the Gujarat High Court decision was limited to items 13 and 68, emphasizing that item 12 covered the place of origin of the oil and should be preferred over item 68. The Tribunal considered the chemical characteristics of fats and oils, noting that while solid fats differ from liquid oils in physical state, they remain chemically identical. The Tribunal highlighted that item 12 covers all sorts of vegetable non-essential oils, including solidified oils like hardened rice bran oil, which are essentially the same substance as liquid oils.

The Tribunal analyzed the definitions and scope of item 12 and item 13, emphasizing that hardening for human consumption does not render inedible oils edible. They discussed the practice of assessing only oils hardened to a manageable point under item 13, based on tariff definitions. The Tribunal concluded that item 12 can encompass all types of vegetable non-essential oils, except those specifically covered under item 13. They rejected the application of the DCM judgment, emphasizing that the issue was about proper classification, not excisability. Ultimately, the Tribunal ruled in favor of assessing the hydrogenated rice bran oil under item 12, setting aside the Government's notice issued to challenge the Appellate Collector's decision.