1988 (12) TMI 281 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Hardened Rice Bran Oil (HRBO)
2. Applicability of Notification 201/79
3. Jurisdiction and Competence of the Assistant Collector
4. Use of Intermediate Products in Manufacturing Process

Detailed Analysis:

1. Classification of Hardened Rice Bran Oil (HRBO):
The primary issue revolves around whether HRBO should be classified under Item 12 or Item 68 of the Central Excise Tariff (CET). The Tribunal had previously held that HRBO was classifiable under Item 12, CET, as a sort of vegetable non-essential oil. This classification was upheld by the Supreme Court in the case of Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd. However, the respondents had been paying duty on HRBO under Item 68, CET, as per the insistence of the Department. The Assistant Collector re-classified HRBO under Item 12, CET, in his order, which was contested by the respondents on the grounds of jurisdiction and competence.

2. Applicability of Notification 201/79:
Notification 201/79, dated 4-6-1979, allowed for the set-off of duty paid on inputs falling under Item 68, CET, against the duty payable on the finished product. The respondents were availing themselves of this benefit for HRBO used in soap manufacturing. The Department argued that since HRBO was classifiable under Item 12, CET, the notification did not apply. However, the Collector (Appeals) observed that the benefit could not be denied as the duty had been levied on HRBO under Item 68, and the only process applied was Chlorate Bleaching, which did not change the product's nature.

3. Jurisdiction and Competence of the Assistant Collector:
The respondents questioned the Assistant Collector's jurisdiction to re-classify HRBO under Item 12, CET, which had already been classified under Item 68 by the jurisdictional authorities. The Tribunal upheld that the Assistant Collector in charge of the respondents' factory had no jurisdiction to unilaterally proceed with the re-classification. This principle was supported by previous Tribunal decisions in Jay Industries v. Collector of Central Excise, Hyderabad, and Collector of Central Excise, Allahabad v. Hindustan Aluminium Corporation.

4. Use of Intermediate Products in Manufacturing Process:
The Department argued that the bleaching of HRBO was an activity that attracted duty, citing various judgments. However, the Tribunal noted that the Supreme Court had held in Tata Oil Mills Co. v. Collector of Central Excise that the use of a specified raw material for manufacturing a specified finished product could be through an intermediate stage. The Tribunal's decisions in Collector of Central Excise, Hyderabad v. Sirsilk Ltd. and Collector of Central Excise v. Garware Paints Ltd. supported the view that an intermediate stage, even if exempted, did not bar the availment of the notification's benefit.

Conclusion:
The Tribunal concluded that the Assistant Collector had no jurisdiction to re-classify HRBO under Item 12, CET, and that the classification and assessment under Item 68, CET, should be upheld. Consequently, Notification 201/79 was applicable, allowing the respondents to set off the duty paid on HRBO against the duty payable on soap. The appeal by the Collector of Central Excise, Calcutta, was dismissed, and the order passed by the Collector (Appeals) was upheld.