1987 (2) TMI 396 - HC - Central Excise

Summary

Issues Involved:
1. Constitutional validity of the Board Act and the Cess Act.
2. Jurisdiction of the High Court under Article 226 of the Constitution of India.
3. Definition and scope of "vegetable oil" under Section 3(h) of the Board Act.
4. Levy of cess on oil derived from oil cakes and rice bran.

Issue-Wise Detailed Analysis:

1. Constitutional Validity of the Board Act and the Cess Act:
The petitioners initially challenged the constitutional validity of the Board Act and the Cess Act. However, this challenge was not pressed because the Supreme Court had already decided the matter in "Messrs New Maharashtra Flour Mills and Ors. v. Union of India," rendering the issue res judicata. Thus, the primary focus shifted to whether the oil extracted by the petitioners falls under the definition of "vegetable oil" within the meaning of Section 3(4) of the Board Act.

2. Jurisdiction of the High Court under Article 226 of the Constitution of India:
The respondents argued that the High Court should not exercise its writ jurisdiction under Article 226 of the Constitution and should direct the parties to their statutory remedies under the Cess Act, citing the Supreme Court's decision in "Assistant Collector of Central Excise v. Dunlop India Limited." The Court acknowledged that while it is a well-settled proposition that the High Court should not entertain a writ petition if there is an adequate alternative remedy, this rule is discretionary and subject to exceptions. The exceptions include cases where the validity of an enactment is questioned or where orders are per se without jurisdiction. Since the writ petitions were initially admitted on the grounds of constitutional validity, the Court decided to exercise its discretion and consider the merits of the case, especially as the facts were not in dispute.

3. Definition and Scope of "Vegetable Oil" under Section 3(h) of the Board Act:
The core issue revolved around the definition of "vegetable oil" in Section 3(h) of the Board Act, which states: "Vegetable oil means any oil produced from oilseeds, or any other oil-bearing materials of plant origin, and containing glycerides but does not include any such vegetable oil which has been subjected to any proceeding subsequent to the recovery of oil." The Court noted that the definition has three parts: (a) oil produced from oilseeds, (b) oil produced from any other oil-bearing material of plant origin containing glycerides, and (c) exclusion of oil subjected to any processing post-recovery. The petitioners contended that oil extracted from oil cakes through the solvent extraction process is not covered by this definition, particularly the second clause. The respondents, however, argued that oil extracted from oil cakes falls under the second clause.

4. Levy of Cess on Oil Derived from Oil Cakes and Rice Bran:
The Court examined the meaning of "plant origin" and concluded that there must be a direct nexus between the oil-bearing material and the plant. The oil cakes, being by-products of oilseeds after oil extraction, are distinct commercial commodities and not directly derived from the plant. Therefore, oil extracted from oil cakes through the solvent extraction process does not qualify as "vegetable oil" under Section 3(h) of the Board Act. Consequently, no cess can be levied on oil derived from oil cakes. However, the Court noted that there was a factual dispute regarding the process of oil extraction from oilseeds and rice bran, thus relegating the petitioners to their statutory remedies for these issues.

Conclusion:
The writ petitions were partly allowed. The show cause notices for the levy of cess on oil derived from oil cakes were quashed, and it was declared that the petitioners are not liable to pay any cess under Section 3 of the Cess Act for oil derived from oil cakes through the solvent extraction process. The petitioners were directed to pursue their statutory remedies regarding the levy of cess on oil derived from oilseeds and rice bran. No order as to costs was made.