2011 (4) TMI 270 - AT - Central Excise

Exemption under Notification No.115/75 dated 30.4.1975 - Exempted in the notification is the goods (other than especially mentioned therein) manufactured in factories covered by any of the industries specified in the schedule. It is to be kept in mind that the Notification refers to Oil mill and solvent extraction industry which suggests that any goods manufactured in a factory which may qualify as Oil Mill Solvent Extraction Industry , is entitled to exemption. In this view of the matter, the fact that the appellant purchased crude oil and by subjecting the same to refining process manufactured oil is immaterial. As observed in the case of A.P. Solvex Ltd. v. CCE, Ludhiana (supra), in the absence of any such condition or stipulation therein, the benefit of exemption will be available to all factories covered by oil mill or solvent extraction industry. The Revenue was, therefore, not justified in imposing duty on the fatty acids and residues which are by-products of the manufacturing process in the factory premises of the appellants.

Issues:
- Interpretation of Notification No.115/75 dated 30.4.1975 for exemption under the Central Excise Rules.
- Whether the by-products of the manufacturing process in the factory are subject to excise duty.
- Eligibility of factories engaged in refining processes to claim exemption under the said notification.
- Applicability of the exemption to factories involved in the purchase of crude oil and subsequent refining processes.

Analysis:
The case involved an appeal before the Appellate Tribunal where the appellant sought a stay on the demand confirmed by the impugned order. The core issue revolved around the appellant's factory activities, including solvent extraction of oil, refining, and purchasing crude oil for refining. The Department contended that since the appellant did not perform milling/solvent extraction on the impugned goods, the derived products like soya lecithin and oil sludge could not be considered products of an Oil Mill/Solvent Extraction Plant. Consequently, duty and penalty were imposed based on this argument.

The appellants relied on a previous Tribunal case, Prakash Solvex vs. C.C.E., Indore, and a decision in A.P. Solvex Ltd. v. CCE., Ludhiana to support their claim for exemption under Notification No. 115/75. The Tribunal's decision emphasized that the benefit of exemption extends to factories covered by the Oil Mill and Solvent Extraction Industry, irrespective of whether the manufacturing process involved extraction of oil from oil seeds or purchase of crude oil for refining. The Tribunal highlighted that the exemption notification did not impose conditions regarding the source of raw materials or the extraction process within the factory.

The Tribunal further analyzed the wording of the exemption notification and clarified that any goods manufactured in a factory falling under the Oil Mill and Solvent Extraction Industry are entitled to exemption, without specific requirements regarding the manufacturing process. The Tribunal rejected the Revenue's argument that the benefit of exemption was limited to units engaged in oil extraction processes, emphasizing that the notification's scope encompassed all factories falling under the industry category.

Given the precedents and the absence of new arguments from the Department, the Tribunal found no merit in the Department's case and allowed the appeal, granting consequential benefits to the appellants. The judgment reaffirmed that the exemption under Notification No. 115/75 applied to factories covered by the Oil Mill and Solvent Extraction Industry, regardless of the specific manufacturing processes involved, as long as the goods were manufactured within such factory premises.

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