2014 (2) TMI 876 - AT - Central Excise

Whether the respondents herein is entitled for the benefit of Notification No.115/75-CE dtd 30.4.1975 as amended for exemption of the product soap manufactured by them - respondent herein is the manufacturer and is manufacturing vanaspati and refined edible oil in a composite mill and under takes oil milling and solvent extraction in their factory prior to refining - Held that - all the products manufactured by the assessee in one of the industries specified in the schedule of the notification are eligible for exemption. As already recorded herein above, there is no dispute that the respondent falls under the category of oil mill and solvent extraction industry . If it be so, benefit of the above said notification will be extendable to the respondent herein. We find that the adjudicating authority has correctly done so by relying upon the decisions of this Tribunal. The said decisions are already cited herein above, in the submissions made by the learned advocate. We find that the revenue is not able to bring on record any contrary evidence to indicate that respondent is not an oil milling and solvent extraction unit. The entire exercise of the revenue in this appeal seems to be that the respondents is not oil milling and solvent extraction unit , they were also manufacturing soap which is not a bye-product but a final product and does not fit into the activity of oil milling or solvent extraction. Notification as reproduced verbatim does not specify the requirement of the final products being related to the industry which are covered in the schedule of the said notification. Another point argued by the revenue is that during the relevant period appellant had not manufactured any item in the oil milling and solvent extraction unit, hence not eligible for the benefit of notification, seems to be flimsy and baseless argument, as said notification does not indicate that the assessee needs to continuously manufacture the goods to avail the benefit of exemption granted by notification No.115/75-CE - Decided against Revenue.

Summary

Issues involved:
- Interpretation of Notification No.115/75-CE for exemption of soap manufacturing
- Eligibility of the respondent for the benefit of the notification based on the industry classification
- Requirement of functionality of the oil milling and solvent extraction unit for availing the exemption
- Whether soap can be considered a bye-product of the oil mill and solvent extraction industry

Analysis:
1. The appeal revolved around the eligibility of the respondent for the benefit of Notification No.115/75-CE for the exemption of soap manufacturing. The respondent, a manufacturer of vanaspati and refined edible oil, utilized soap stock and acid oil to produce soap, claiming exemption under the said notification. The lower authority alleged that soap was not a bye-product but a finished product, hence challenging the eligibility of the respondent for the exemption.

2. The main contention of the revenue was that the functionality of the oil milling and solvent extraction unit is crucial for availing the benefit of the notification. The revenue argued that since the solvent extraction plant was closed during certain periods, the benefit of the notification cannot be extended. They emphasized that only products arising from the working of the plant could qualify for exemption, questioning the classification of soap as a bye-product.

3. The respondent, on the other hand, argued that there was no requirement in the notification regarding the functionality of the mill for availing the exemption. They cited previous tribunal decisions supporting their position that the benefit of the notification should be extended in cases like theirs. The respondent contended that they fell under the category of the "oil mill and solvent extraction industry" specified in the notification, making them eligible for the exemption.

4. The Tribunal analyzed the notification and the facts of the case. It noted that the respondent indeed fell under the category of "oil mill and solvent extraction industry" as per the notification. The Tribunal emphasized that the notification did not specify a continuous manufacturing requirement for availing the exemption. Therefore, the Tribunal upheld the impugned order, stating that the respondent was entitled to the benefit of the notification. The revenue's appeal was deemed devoid of merits and rejected.

In conclusion, the judgment clarified the eligibility criteria for availing the exemption under Notification No.115/75-CE, emphasizing the industry classification and the absence of a continuous manufacturing requirement in the notification. The decision was based on a thorough analysis of the notification's language and previous tribunal rulings, ultimately ruling in favor of the respondent and rejecting the revenue's appeal.