2017 (1) TMI 221 - AT - Central Excise

Benefit of Notification No. 43/2001-CE(NT) dated 26-6-2001 - duty free procurement - Hexane - denial of benefit on the ground that hexane used not only for De-oiled Cake (DOC) but it is also used for manufacture of oil which is not exported - Held that - During the manufacture of DOC, soyabeain oil generated unavoidable. The generation of the oil cannot be avoided for the manufacture of DOC. In this fact the Hexane which is procured duty free is used for manufacture of DOC. The N/N. 43/2001 read with concessional duty rules, 2001, the goods for use in manufacture of exports goods are allowed to be procured duty free - no violation of notification or rules made thereunder. Reliance placed on the decision of the own case of appellant CCE Vs. Murli Agro Products Ltd 2007 (5) TMI 388 - CESTAT, MUMBAI , where it was held that The Notification requires that the person desiring to export goods without payment of duty under bond may procure inputs for manufacture of such export goods and declare input, output ratio with respect to the export product and the input. There is no stipulation that each and every product that is manufactured during the process has to be exported. Benefit available - appeal rejected - decided against revenue.

Summary

Issues: Duty-free procurement of Hexane for manufacturing Refined Edible Oil, applicability of Notification No. 43/2001-CE(NT) for duty-free benefit, dispute over the usage of Hexane for manufacturing De-oiled Cake (DOC) and oil, interpretation of the notification and concessional duty rules, reliance on previous judgments, compliance with import and export norms, determination of duty-free eligibility.

In this case, the respondent, engaged in manufacturing and exporting Refined Edible Oil, procured duty-free Hexane under Notification No. 43/2001-CE(NT) for their solvent extraction plant. The dispute arose from the usage of Hexane for manufacturing De-oiled Cake (DOC) and oil, with the department contending that the benefit was incorrectly availed as the Hexane was also used for non-exported oil production. The Commissioner (Appeals) allowed the appeal, prompting the revenue to appeal. The revenue argued that duty-free procurement is only allowed for goods used in manufacturing export goods, citing relevant judgments to support their stance. On the other hand, the respondent maintained that the Hexane was used in compliance with the concessional duty rules and that the issue was covered by a Tribunal judgment in their favor.

Upon careful consideration, the Tribunal found that the Hexane was indeed used for manufacturing DOC, with the generation of oil being unavoidable in the process. As per Notification No. 43/2001 and the concessional duty rules, goods used in manufacturing export goods are eligible for duty-free procurement. The Tribunal noted that the issue had been previously decided in favor of the respondent in their own case, emphasizing that not every product manufactured during the process needs to be exported. The Tribunal upheld the Commissioner's decision, stating that the respondents were eligible for the benefit of the Notification. The Tribunal concluded that there was no violation of the notification or rules, and as the issue was settled in previous judgments, the impugned order was upheld, and the revenue's appeal was dismissed.