2019 (7) TMI 249 - AT - Central Excise

Excisability - Waste/scrap/by-product - gum/ wax/ fatty oils etc. - benefit of N/N. 89/1995-CE - whether the fatty acids/ wax/ gums, etc., which arise while crude vegetable oil is refined should be considered as waste or as by-product? - HELD THAT - The matter has been decided by the Larger Bench of the Tribunal in 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 and it has been held that these products are not intentionally manufactured but only arise during the process of refining of crude vegetable oil and therefore should be considered as waste and they are entitled to the benefit of exemption N/N. 89/1995-CE. Demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of products as waste or by-products for Central Excise duty exemption under notification 89/1995-CE.

Analysis:
1. The appeal challenged an Order-in-Appeal regarding the classification of certain products arising during the refining of vegetable oil as either waste or by-products for Central Excise duty purposes. The appellant, engaged in refining crude vegetable oil, sold products like gums, wax, and fatty oils to soap manufacturers without paying Central Excise duty. The revenue contended that these products were not waste or scrap and should be classified under Central Excise Tariff, thus attracting duty. The appellant claimed exemption under notification 89/1995-CE, arguing that these products were waste arising during the refining process and not intended for manufacturing. A show cause notice was issued, demanding duty and imposing penalties, which were confirmed by the lower authority but later set aside by the first appellate authority, leading to this appeal.

2. The main issue revolved around whether the products like gums, wax, and fatty oils emerging during the vegetable oil refining process should be considered waste or by-products for Central Excise duty purposes. The appellant relied on a previous Tribunal decision in Ricela Health Foods Ltd, emphasizing that the products were not intentionally manufactured but arose incidentally during the refining process, thus qualifying as waste and eligible for exemption under notification 89/1995-CE. The revenue argued that these products were by-products and not waste, hence not entitled to the exemption.

3. The Tribunal, following the precedent set by the Larger Bench in Ricela Health Foods Ltd, concluded that the products in question were indeed waste arising during the refining process and should be considered as such for exemption purposes. The Tribunal held that since these products were not intentionally manufactured but emerged incidentally during the refining of crude vegetable oil, they qualified as waste and were entitled to the benefit of exemption notification 89/1995-CE. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant.