1995 (3) TMI 203 - AT - Central Excise

Summary

Issues Involved:
1. Classification of dehydrated castor oil (monomeric and polymeric).
2. Eligibility for Notification 69-C of 1984.

Detailed Analysis:

1. Classification of Dehydrated Castor Oil:

The primary issue in the appeal was the classification of dehydrated castor oil, both monomeric and polymeric. The Collector of Central Excise (Appeals), Bombay, had classified these products under Tariff Item 12 of the erstwhile Central Excise Tariff, which was not contested at the lower levels. However, the Department sought to reclassify the oils under Tariff Item 68, arguing that the cracking process leads to a molecular change in the oil, thus altering its identity from castor oil.

The Department failed to provide evidence supporting this claim, merely reiterating the grounds in the memorandum of appeal. Conversely, the respondent cited technical literature, notably "Bailey's Industrial Oil and Fat Products," which explained that dehydration of castor oil involves the removal of hydroxyl groups, changing its solubility characteristics but not its identity as castor oil. This was supported by the Supreme Court judgment in Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd., which held that hydrogenated rice bran oil remains classifiable under Item 12 as it continues to be a vegetable non-essential oil after hardening.

2. Eligibility for Notification 69-C of 1984:

The Collector (Appeals) had found that the dehydration process applied to castor oil did not fall under the processes specified in Entry 7 of Notification 69-C of 1984, which exempts vegetable non-essential oils other than processed vegetable oils. The specified processes include treatment with an alkali or acid, bleaching, and deodorization. Since the dehydration process did not involve any of these, the oil remained eligible for the notification's benefits.

Separate Judgments:

Majority Opinion:
The majority, comprising Member (T) and Member (J), upheld the Collector (Appeals)'s decision. They concluded that the dehydration process does not result in a new product and does not change the classification of the oil. They emphasized that the process merely involves removing water and does not chemically alter the oil to the extent that it becomes a different product. Therefore, the oil remains classifiable under Item 12, and the benefit of Notification 69-C of 1984 is applicable.

Dissenting Opinion:
The Vice President disagreed, arguing that dehydrated castor oil is chemically different from castor oil due to the dehydration process, which involves significant changes in properties such as iodine value, viscosity, and solubility. He cited technical literature to support the view that dehydrated castor oil is recognized as a distinct product with its own properties and uses. Consequently, he opined that it should be classified under Tariff Item 68, making it ineligible for Notification 69-C of 1984.

Final Order:
In view of the majority opinion, the appeal was dismissed, confirming the classification under Tariff Item 12 and the eligibility for Notification 69-C of 1984.

Conclusion:
The judgment affirmed that dehydrated castor oil, despite undergoing a dehydration process, retains its classification under Tariff Item 12 and remains eligible for the benefits of Notification 69-C of 1984. The majority opinion emphasized the lack of evidence for reclassification and the consistency with previous judicial interpretations.