2018 (10) TMI 393 - AT - Central Excise

By-products - Benefit of N/N. 115/75-CE dated 30.4.1975 - Department was of the view that the appellant should have paid duty of excise on clearance of dutiable by-products such as soap stock (gum), sludge, fatty acid oil, spent earth, getting manufactured/generated in the process of manufacturing refined edible oil - Held that - Tribunal in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD, 2018 (2) TMI 1395 - CESTAT NEW DELHI , the Regional Bench of this Tribunal in Allahabad has also extended the benefit of Notification 89/1995-CE on clearances of waste products such as fatty acid oil, sludge, soap stock (gums) and spent earth generated during the manufacture of refined edible oil. Benefit allowed - appeal allowed - decided in favor of appellant

Summary

Issues:
1. Whether the appellant is required to pay central excise duty on dutiable by-products arising during the manufacture of refined oils?
2. Interpretation of Notification No. 89/95-CE dated 18/5/1995 and its applicability to the waste products generated during the manufacturing process.

Analysis:

Issue 1:
The appellant, engaged in the manufacture of refined oils, faced a demand for central excise duty on by-products like soap stock, sludge, fatty acid oil, and spent earth arising during the manufacturing process. The Department contended that duty should be paid on these by-products. However, the appellant argued for the benefit of Notification No. 89/95-CE dated 18/5/1995, which exempts waste products if the final product is either duty-free or charged at a nil rate. The Tribunal noted that the by-products were not in the nature of by-products emerging during the manufacture of refined edible oil. The process of removing unwanted materials cannot be considered as part of the manufacturing process of refined oil. The Tribunal held that the waste products in question were not excisable goods but waste arising during the refining process, thus covered by the exemption notification.

Issue 2:
The Tribunal referred to a Larger Bench decision that clarified the nature of waste products generated during the manufacturing process of refined edible oil. Following this decision, the Tribunal extended the benefit of Notification 89/1995-CE to waste products like fatty acid oil, sludge, soap stock (gums), and spent earth. As the issue was already settled by the Larger Bench judgment, the Tribunal set aside the order-in-appeal and allowed the appeal, granting the appellant consequential benefits. The Regional Bench in Allahabad had also applied the same interpretation in a similar case, aligning with the decision of the Larger Bench.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the waste products generated during the manufacturing process of refined oils were covered by the exemption notification, and thus, the appellant was not liable to pay central excise duty on these by-products.