1988 (4) TMI 220 - HC - Central Excise

Summary

Issues:
Challenge to the imposition of cess on bran oil by the Union of India under the Vegetable Oils Cess Act. Interpretation of whether bran oil is produced from oil-yielding material of plant origin.

Analysis:
The writ petition challenges the validity of the cess imposed by the Union of India on bran oil under the Vegetable Oils Cess Act. The petitioner, Andhra Pradesh Rice Bran Solvent Extractors Association, argues that bran oil is not a vegetable oil within the meaning of the relevant Acts. The Act authorizes the imposition of cess only on vegetable oils produced in a mill. The key question is whether rice bran oil falls within the definition of vegetable oil as per the Acts. The definition refers to oil produced from oil-bearing material of plant origin. The petitioner contends that rice bran, from which the oil is extracted, is not of plant origin as it is derived from rice, which is produced from paddy. The central issue is whether rice bran oil is produced from material of plant origin as required by the Acts.

The Court delves into the genealogical origin of rice bran to determine if it qualifies as material of plant origin. It emphasizes that the plant origin should be traced back to the source, which in this case is paddy. The argument that rice bran is not of plant origin because it is derived from rice and not directly from paddy is rejected. The Court asserts that rice bran is an integral part of paddy, which is unquestionably of plant origin. The physical process of separating rice bran from paddy does not change its plant origin. The imposition of cess is limited to oils produced from material of plant origin, excluding mineral or animal origin materials. The Court concludes that rice bran oil, being a product of rice bran, is produced from material of plant origin, dismissing the petitioner's argument.

The Court distinguishes cases under Sales Tax Acts cited by the petitioner, stating they are irrelevant to the issue at hand. These cases made distinctions between rice bran, husk, paddy rice, and other materials for sales tax purposes, which does not determine the plant origin of oil-yielding rice bran. The Court emphasizes that the interpretation should focus on the language and context of the present Act. The Court finds no merit in the writ petition and dismisses it with costs. The Government is restrained from encashing bank guarantees for three months, subject to renewal. The oral application for a Supreme Court appeal certificate is rejected as the case does not involve a substantial question of law necessitating Supreme Court intervention.