2015 (5) TMI 976 - AT - Central Excise

Denial of exemption claim - appellant s claim for the benefit of Notification No.115/75 as amended which exempts goods manufactured in a factory coming under the category of oil mill or solvent extraction industry - Job work - prescribed procedure not followed - Held that - Prescribed procedure under Notification No.214/86 was not followed and therefore RRRL or the appellant is liable to pay duty. The Commissioner also considered the appellant s claim for the benefit of Notification No.115/75 as amended which exempts goods manufactured in a factory coming under the category of oil mill or solvent extraction industry on the ground that the factories involved in refining and extracting crude oil are separate and to get the benefit of exemption entire activity has to be in one factory - factories which are engaged in extracting crude oil and refining the same would be covered by the term oil mill and solvent extraction industry . The decisions also support the claim that even if a factory is engaged only in refining it would be still covered by the terms used in the notification. That being the position the appellant is clearly eligible for the benefit of Notification No.115/75 CE as amended. It has to be noted that the decisions applied to the situation prior to amalgamation as well as after amalgamation. This is because in the case of Prakash Solvex (2008 (1) TMI 328 - CESTAT NEW DELHI) the Tribunal was dealing with a case where only refining was undertaken - There was an alternative claim made for the benefit of Notification No.89/95 which exempts waste parings and scrap arising during the manufacture of exempted goods. - Decided in favour of assessee.

Issues:
1. Whether the appellant is liable to pay duty for manufacturing refined rice bran oil without following the prescribed procedure?
2. Whether the appellant is entitled to the benefit of Notification No.115/75 CE for exemption of goods manufactured in oil mill or solvent extraction industry?
3. Whether the appellant's claim for exemption under Notification No.89/95 for waste arising during manufacturing should be considered?

Analysis:

Issue 1: Liability for Duty
The appellant, engaged in manufacturing refined rice bran oil, faced proceedings for non-payment of Central Excise duty amounting to Rs. 1,40,97,966 for the period from June 2001 to February 2006. The impugned order held that the prescribed procedure under Notification No.214/86 was not followed, making RRRL or the appellant liable to pay duty. Additionally, the Commissioner rejected the appellant's claim for the benefit of Notification No.115/75, emphasizing that the factories involved in refining and extracting crude oil must be in one factory to qualify for exemption.

Issue 2: Benefit of Notification No.115/75 CE
The appellant contended that they are eligible for the benefit of Notification No.115/75 CE, citing the decision in the case of Bombay Oil Industries Ltd. vs. CCE [1997(91) ELT 538 (SC)]. The Hon'ble Supreme Court clarified that goods manufactured in a solvent extraction plant, like the appellant's, are entitled to exemption under the notification, regardless of whether the oil extraction and refining activities were in separate factories before or after amalgamation.

Issue 3: Claim under Notification No.89/95
An alternative claim was made by the appellant for exemption under Notification No.89/95, which exempts waste arising during the manufacture of exempted goods. However, the Tribunal did not delve into this claim as the issue was decided in favor of the appellant under Notification No.115/75 CE.

In conclusion, the Tribunal ruled in favor of the appellant, granting them the benefit of Notification No.115/75 CE. The decision highlighted that the appellant, engaged in both extracting crude oil and refining it, falls under the category of 'oil mill and solvent extraction industry,' entitling them to the exemption. As a result, the appeal was allowed with consequential relief to the appellant.

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