2023 (8) TMI 654 - AT - Central Excise

Clandestine Removal - edible refined oil - acid oil - fatty acids - gums - waxes - exempt under Notification No.89/95-CE dated 18.05.1995 as waste or not - demand alongwith interest and penalty - HELD THAT - The findings of Larger Bench wherein the Larger Bench in the matter 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 through detailed chart explained the process of manufacturing of refined rice bran oil and generation of waste at each stage of manufacture. There is nothing on record to show that the manufacturing of acid oil is excluded from the said process of manufacturing of edible oil. The issue whether acid oil can be treated as a waste during the course of manufacture was considered in the case of M/S VINAYAK AGROTECH LTD. VERSUS CCE ST, JAIPUR I 2017 (11) TMI 598 - CESTAT NEW DELHI , and it is categorically held that acid oil is a waste and not a by-product. Hence eligible for the benefit of Notification No.89/95-CE dated 18.05.1995. The issue involved in the appeals has been settled by Larger Bench in the matter of Ricela Health Foods Ltd and the other benches of the Tribunal in similar cases. The impugned orders confirming demand with interest and imposition of penalty in all the above appeals are not sustainable - Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment include clandestine clearance to avoid Central Excise duty, confirmation of demand, interest, and penalties, applicability of Notification No.89/95-CE, excisability of certain products, and eligibility for exemption under different notifications.

Clandestine Clearance and Central Excise Duty:
The appellants, engaged in the manufacture of edible refined oil, were alleged to have engaged in clandestine clearance of products to evade Central Excise duty. Show cause notices were issued, and penalties were imposed by the Adjudication Authority for different periods. The Commissioner (Appeals) set aside the demand, interest, and penalties imposed prior to 01.05.2008 based on the eligibility of certain products for exemption under Notification No.89/95-CE.

Excisability and Applicability of Notifications:
The Commissioner (Appeals) noted that certain products like acid oil, gums, waxes, and fatty acids were considered waste eligible for exemption under Notification No.89/95-CE until 01.05.2008. However, post an amendment in the definition of excisable goods, these products were deemed excisable and chargeable to excise duty from 01.05.2008. The issue of excisability was further examined in light of various case laws and the process of manufacturing refined oil.

Legal Interpretation and Precedents:
The Larger Bench considered whether the products emerging as by-products during the manufacturing process could be classified as excisable goods. It was concluded that certain incidental products like gums, waxes, and fatty acids were waste arising during the refining process and thus exempt under Notification No.89/95-CE. The Tribunal referred to various case laws to support the argument that unintentional by-products during the manufacturing of refined oil should be treated as exempted goods.

Final Decision and Relief Granted:
After considering submissions from both parties and the findings of the Larger Bench, the Tribunal held that the impugned orders confirming demand with interest and penalties were not sustainable. The appeals filed by the appellants were allowed with consequential relief. However, the eligibility of the appellants to avail exemption under Notification No.8/2002 was not addressed in the judgment.