2016 (5) TMI 893 - AT - Customs

Crude Palm Kernel oil -Whether it is vegetable fat and whether benefit of Notification No. 46/2002-Cus can be extended or otherwise - Revenue contended that Crude Palm Kernel oil is not used as raw material, but it is an intermediate for manufacturing biscuits, it is not a raw material, hence not covered by DFRC licence - Held that - the issue is squarely covered by the decision of Tribunal in the case of Good Health Agro Tech Pvt. Ltd 2010 (11) TMI 1013 - CESTAT BANGALORE , where the identical issue was considered and held that Crude Palm Kernel oil is covered under the duty free replenishment certificate. - Decided against the revenue.

Summary

Issues involved:
1. Whether Crude Palm Kernel oil is considered vegetable fat for the purpose of Notification No. 46/2002-Cus?
2. Whether the benefit of Notification No. 46/2002-Cus can be extended to Crude Palm Kernel oil as an intermediate for manufacturing biscuits?

Analysis:

Issue 1:
The appeal concerns the classification of Crude Palm Kernel oil as vegetable fat under Notification No. 46/2002-Cus. The Revenue argues that since the oil is used as an intermediate for manufacturing biscuits and not as a raw material, it does not qualify for the benefits of the notification. The Commissioner of Appeals had denied the benefit based on this argument.

Issue 2:
The Tribunal reviewed the case in light of a previous judgment involving a similar issue, where it was established that Crude Palm Kernel oil is indeed covered under the duty-free replenishment certificate license for intermediate supply. The Tribunal referred to the requirements of the DFRC scheme and noted that the oil does not fall under sensitive items listed in the Handbook of Procedures. Additionally, the Tribunal highlighted a Customs Notification that exempts materials required for manufacturing final goods, including intermediates, from customs duty. The Tribunal emphasized that the oil, even though it needs refining before use in biscuit manufacturing, qualifies as an intermediate under the notification. It was also clarified that the transferee of the license does not need to establish a nexus between the imported goods and their use in export, as per established legal precedents.

In conclusion, the Tribunal upheld the impugned order, rejecting the Revenue's appeal and granting consequential relief for the re-validation of the license in favor of the respondent. The decision was based on the findings that Crude Palm Kernel oil qualifies as an intermediate under the relevant notification and does not require a direct nexus between import and export activities for the benefit of the DFRC scheme.

This detailed analysis covers the key issues raised in the legal judgment, providing a comprehensive understanding of the case and the Tribunal's decision.