1985 (6) TMI 31 - HC - Central Excise

Issues Involved:
1. Classification of vegetable tallow under the Central Excise Tariff.
2. Applicability of exemption notifications to the petitioners' products.
3. Interpretation of "finished excisable goods" under the exemption notification.
4. Equitable treatment of different manufacturers under the exemption notification.

Detailed Analysis:

1. Classification of Vegetable Tallow:
The petitioners, a company manufacturing and processing vegetable oils, classified their product, vegetable tallow, under Tariff Item 13 of the First Schedule to the Central Excises and Salt Act. They argued that their product was exempt from excise duty under Notification No. CER-8 (3)/56, dated 14th March 1956, which exempts vegetable products intended for use in soap manufacture. The court, however, determined that the petitioners' product, hardened oil, should be classified under Tariff Item 13, as the petitioners themselves had classified it throughout the relevant period.

2. Applicability of Exemption Notifications:
The petitioners received multiple show cause notices demanding excise duty on their vegetable non-essential oils. They argued that their product was exempt under Notification No. 33/63, dated 1st March 1963, as amended, which exempts vegetable non-essential oils used in the manufacture of goods falling under Tariff Items 13, 14, and 15. The court examined the exemption notification and concluded that the petitioners' hardened oil, classified under Tariff Item 13, did not qualify for the exemption because it was not directly used in soap manufacture but was an intermediate product.

3. Interpretation of "Finished Excisable Goods":
The court had to interpret whether "finished excisable goods" referred to soap (the final product) or to the hardened oil (intermediate product). The court determined that "finished excisable goods" in the context of the exemption notification referred to goods falling under Tariff Items 13, 14, and 15. Since the petitioners' hardened oil was classified under Tariff Item 13 and was exempt from excise duty under Notification No. CER-8 (3)/56, the vegetable non-essential oil used to produce it was not exempt from excise duty.

4. Equitable Treatment of Different Manufacturers:
The petitioners argued that other manufacturers who converted vegetable non-essential oil into hardened oil and used it for soap manufacture in their own factories were granted exemption from excise duty. The court noted that there was no data to show whether these other manufacturers classified their hardened oil under Tariff Item 13. Therefore, the court could not equate the petitioners' case with those manufacturers. Since the petitioners had classified their hardened oil under Tariff Item 13, they were not entitled to the exemption under Notification No. 33/63.

Conclusion:
The appeal was dismissed. The court concluded that the petitioners' hardened oil was classified under Tariff Item 13 and was exempt from excise duty under Notification No. CER-8 (3)/56. Consequently, the vegetable non-essential oil used to produce it was not exempt from excise duty under Notification No. 33/63. The court also noted that there was no order as to costs due to the absence of the respondents throughout the judgment.

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