1994 (1) TMI 146 - AT - Central Excise

Issues Involved:
1. Whether cotton seed and castor oil recovered by crushing oil seeds, even after treatment with caustic soda or steam for the separation of suspended matters, is liable to Cess as "Vegetable Oil" under Section 3(h) of the National Oil Seeds and Vegetable Oil Development Board Act, 1983.
2. Whether Cess was leviable on the vegetable oil in stock in the appellant's mill on the midnight of 31-12-1983/1-1-1984 under the Vegetable Oil Cess Act, 1983.

Issue-Wise Analysis:

Issue 1: Liability of Cotton Seed and Castor Oil to Cess
The appellants contended that the cotton seed oil and castor oil, after being treated with caustic soda and steam respectively to remove "bagra," should not be considered "Vegetable Oil" as per the latter part of the definition in Section 3(h) of the National Oil Seeds and Vegetable Oil Development Board Act, 1983. They argued that these oils undergo further processing and refinement after recovery, thus falling outside the purview of "Vegetable Oil" as defined in the Act.

The respondent argued that the removal of parts of oil seeds present in the oil extracted by crushing in the expeller, either by treatment with caustic soda or passing steam, is part of the process of recovery or production of oil and cannot be deemed as processing subsequent to its recovery.

The Tribunal examined the relevant records and submissions and referred to paras 9 to 12 of the Supreme Court's judgment in UOI v. D.C.M. reported in 1977 (1) E.L.T. (J 199), which categorizes oil not subjected to refinement processes as crude or unrefined. The Tribunal concluded that since the disputed vegetable oils were not subjected to processes like neutralization with alkali, bleaching, and deodorization, they remained in a crude state and were liable to Cess under the Vegetable Oil Cess Act, 1983.

Issue 2: Levy of Cess on Stock as of Midnight 31-12-1983/1-1-1984
The appellants argued that no Cess was leviable on the vegetable oil in stock on the midnight of 31-12-1983/1-1-1984 as it had been produced before the imposition of Cess under the Vegetable Oil Cess Act, 1983. They cited the Tribunal's decision in Ganesh Extrusion Artistries v. CCE, which supported their contention.

The respondent, however, relied on the Supreme Court's judgment in Wallace Flour Mills Company Ltd. v. CCE, arguing that even though the taxable event is the manufacture or production of an excisable article, the duty can be levied and collected at a later date for administrative convenience.

The Tribunal considered the Supreme Court's judgment in Wallace Flour Mills Company Ltd. and concluded that the situation in the present case was distinguishable. The Vegetable Oil Cess Act, 1983 was brought into force for the first time on the midnight of 31-12-1983/1-1-1984, and prior to this, no cess had been imposed on such oil. Therefore, the Tribunal held that no Cess was leviable on the vegetable oil produced before the Act came into force and remained in stock on the crucial date.

Dissenting Opinion:
One member dissented, agreeing that cotton seed and castor oil were liable to Cess but disagreeing on the stock issue. The dissenting member argued that Cess was leviable on the vegetable oil in stock on the midnight of 31-12-1983/1-1-1984, citing the Gujarat High Court's decision in Surat Art Silk Cloth Manufacturers v. Union of India, which held that the rate of duty prevalent on the date of removal governs the situation.

Final Decision:
The majority opinion held that cotton seed and castor oil recovered by crushing oil seeds, even after treatment with caustic soda or steam, are liable to Cess as "Vegetable Oil" under Section 3(h) of the National Oil Seeds and Vegetable Oil Development Board Act, 1983. However, Cess was not leviable on the vegetable oil in stock in the appellant's mill on the midnight of 31-12-1983/1-1-1984. The appeals were disposed of accordingly with consequential relief to the appellants, if any, according to law.

← Previous Next →