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2022 (5) TMI 252 - AT - Central ExciseWaste or not - benefit of N/N. 89/95-CE - fatty acids arising in course of manufacture of refined palm oil and Vanaspati ghee - HELD THAT - The Appellants are engaged in the manufacture of vanaspati/refined palm oil. They are importing crude palm oil at nil rate of duty in terms of Sl.No.30-II(A) of Notification No.21/2002-CUS dated 01.03.2002 as amended by Notification No.42/2008-CUS dated 01.04.2008. It is found that fatty acid is not manufactured as excisable goods from crude palm oil, rather it is waste arising in the course of manufacture. The Ld.Commissioner has erred in finding that they are not eligible for the benefit of Notification No.89/1995-CE because they are manufacturing tin containers/HDPE jars as submitted by the Ld. Counsel for the Appellants. The Ld. Commissioner has not appreciated the fact that the tin containers/HDPE jars manufactured are also eligible for exemption under Notification No.10/1996 as submitted by the Appellant. The Larger Bench of the 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 has held that Noting that the reference is to decide whether these are to be treated as waste for the purpose of exemption N/N. 89/95-CE we note though the excisability of the product itself is seriously in dispute as per the opinion expressed by us, as above, these cannot be considered as anything other than waste and as such will be covered by the exemption N/N. 89/95-CE. The Appellants are entitled to exemption contained in Notification No.89/1995-CE on the products which arise incidentally to the manufacture of vegetable oils - the impugned order misplaced itself and the findings vis- vis tin containers/HDPE jars manufactured and captively consumed in the factory The impugned orders cannot be sustained and are therefore set aside - Appeal allowed - decided in favor of appellant.
Issues:
- Interpretation of Notification No.89/1995-CE for exemption from excise duty on incidental products - Classification of 'fatty acid' as excisable goods or waste - Eligibility for exemption under Notification No.10/1996-CE for tin containers/HDPE jars Analysis: 1. Interpretation of Notification No.89/1995-CE: The Appellant, a manufacturer of refined palm oil and Vanaspati ghee, availed exemption under Notification No.89/1995-CE. The issue revolved around whether the incidental products arising during the manufacturing process, such as 'fatty acid,' should be considered excisable goods or waste. The Appellant argued that these products are waste and covered by the exemption. The Tribunal referenced a previous decision and the Supreme Court's ruling to conclude that such incidental products are waste arising during refining and are covered by the exemption. 2. Classification of 'fatty acid' as excisable goods or waste: The Commissioner alleged that the Appellant removed 'fatty acid' without paying duty, claiming it was liable for duty payment. The Appellant contended that 'fatty acid' is a waste arising during the manufacture of vanaspati ghee/refined palm oil, not an excisable good. The Tribunal agreed with the Appellant, emphasizing that 'fatty acid' is not manufactured from crude palm oil but is a byproduct of the refining process, thus qualifying as waste covered by the exemption. 3. Eligibility for exemption under Notification No.10/1996-CE: The Appellant also argued that the tin containers/HDPE jars manufactured in-house were exempted goods under Notification No.10/1996-CE. The Tribunal found that the Ld. Commissioner erred in denying the Appellant the benefit of the exemption, as the tin containers/HDPE jars were also eligible for exemption under Notification No.10/1996-CE. The Tribunal held that the Appellants were entitled to the exemption contained in Notification No.89/1995-CE for products incidentally arising during the manufacture of vegetable oils, setting aside the impugned orders and allowing the Appeals filed by the Appellants with consequential relief. This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's findings and conclusions, ensuring a comprehensive understanding of the case.
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