2016 (12) TMI 1692 - AT - Central Excise

Whether the Soap Stock arising in the course of manufacture of Vanas pati was the goods manufactured by oil plant of the appellant to enjoy exemption benefit under N/N. 115/75-C.E. dated 30-4-1975? Held that - Revenue did not rule out that Vanaspati manufactured by a oil mill is also eligible to get exemption under the aforesaid notification - also manufacture of soap stock was not ruled out by Revenue nor disputed that the same was marketable. Exemption allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether Soap Stock arising in the course of manufacture of 'Vanaspati' qualifies for exemption under Notification No. 115/75-C.E., dated 30-4-1975.

Analysis:
The central issue in this case before the Appellate Tribunal CESTAT CHENNAI was whether the Soap Stock arising during the production of 'Vanaspati' by an oil plant could be considered as goods manufactured by the plant, thus making it eligible for exemption under Notification No. 115/75-C.E., dated 30-4-1975. The appellant argued that since 'Vanaspati' is manufactured by the oil mill industry and soap stock is a by-product of this process, it should be considered marketable goods meeting the criteria of manufacture and marketability as per the decision in the case of Board of Trustees v. CCE, A.P. The Revenue, however, contended that the appellant was not a solvent extraction plant and therefore not entitled to the exemption benefit.

The Tribunal disagreed with the Revenue's stance, emphasizing that the soap stock produced during the manufacture of 'Vanaspati' was indeed marketable and met the requirements of manufacture and marketability as established by the Apex Court judgment. The Tribunal highlighted that the soap stock was a legitimate by-product of the manufacturing process of 'Vanaspati' by the oil mill industry, making it eligible for the exemption under the said notification. Consequently, the Tribunal allowed the appeal in favor of the appellant.

During the proceedings, the Tribunal referenced a previous decision in the case of G.P. Industries v. CCE, Guntur, where it was held that Acid Oil Soap obtained as a by-product in solvent extraction oil refining mills was entitled to the benefit of the same notification. The Tribunal noted that this decision had been upheld by the Apex Court, emphasizing the distinction that the soap product in that case emerged from a solvent extraction industry, not an oil mill industry. The Tribunal clarified that its decision was based on the premise that the Revenue did not dispute the eligibility of 'Vanaspati' manufactured by an oil mill for the exemption, and that the soap stock was both manufactured and marketable, meeting the necessary criteria for excisability as per the Apex Court ruling. The Tribunal also criticized past Tribunal decisions lacking clear reasoning and stated that its judgment was firmly grounded on the principles established by the Apex Court.

In conclusion, the Tribunal's detailed analysis reaffirmed the eligibility of the soap stock arising from the production of 'Vanaspati' by an oil plant for exemption under Notification No. 115/75-C.E., dated 30-4-1975, based on the criteria of manufacture and marketability as per legal precedents and established principles.