1984 (10) TMI 46 - HC - Central Excise

Summary

Issues:
1. Interpretation of exemption notification regarding duty on 'industrial hard oil'.
2. Classification of 'clarified oil' as a marketable commodity and its liability for duty.
3. Exemption claim for 'clarified oil' under Notification No. 33/63 for use in soap manufacturing.

Analysis:

Issue 1: Interpretation of Exemption Notification
The petitioner, engaged in manufacturing 'industrial hard oil' from raw castor oil, contested the duty levy under Tariff Item No. 12 of the Central Excises and Salt Act, 1944. The contention centered on whether the 'industrial hard oil' qualifies as 'processed vegetable non-essential oil' under the exemption notification. Both the Appellate and Revisional Authorities concluded that the process involved, including bleaching, categorizes the product as 'processed'. The court upheld this finding, emphasizing that the processing, even if not to certain specifications, constitutes bleaching as defined in the notification. Consequently, the 'clarified oil' was deemed a processed vegetable non-essential oil, thus not eligible for exemption.

Issue 2: Classification of 'Clarified Oil'
The authorities determined that 'clarified oil' is a marketable commodity, falling under the definition of goods attracting excise duty. The court upheld this classification, noting the absence of evidence to refute the marketability of the product. As a result, the contention against the classification of 'clarified oil' as goods was rejected, affirming its liability for duty under the Act.

Issue 3: Exemption Claim for 'Clarified Oil'
The petitioner argued for exemption under Notification No. 33/63, citing the use of 'clarified oil' in soap manufacturing falling under Tariff Item No. 15. However, this claim was not raised before the lower authorities. The court highlighted that the 'clarified oil' is not directly used in soap production but is further processed into hardened oil, a marketable commodity. Referring to a precedent, the court held that since the clarified oil can be sold as hardened oil independently, its use in soap manufacturing does not qualify for exemption. Consequently, the exemption claim based on soap manufacturing was dismissed.

In conclusion, the writ petition challenging the duty levy on 'clarified oil' was dismissed, upholding the classification of the product as processed and marketable, thereby liable for excise duty. The court rejected the exemption claim under Notification No. 33/63 due to the product's marketability and its use in soap manufacturing process. The petitioner was granted two months to pay the excise duty, and the request for leave to appeal to the Supreme Court was denied based on the lack of substantial legal questions of general importance.