1995 (5) TMI 131 - AT - Central Excise

Issues Involved:

1. Eligibility of glycerine for exemption under Notification No. 115/75-C.E.
2. Classification of glycerine as a product of "Oil Mill & Solvent Extraction Industry."
3. Interpretation of the manufacturing process and commercial understanding of glycerine.

Detailed Analysis:

1. Eligibility of Glycerine for Exemption under Notification No. 115/75-C.E.:

The appeal arose from an order by the Additional Collector of Central Excise & Customs, Vadodara, which denied the benefit of exemption Notification No. 115/75-C.E. to glycerine produced from castor oil. The appellant contended that glycerine, being a product of the oil mill and solvent extraction industry, was entitled to the exemption. The Additional Collector, however, held that glycerine could be manufactured by any unit and was not necessarily a product of an oil mill or solvent extraction industry, thus denying the exemption.

2. Classification of Glycerine as a Product of "Oil Mill & Solvent Extraction Industry":

The manufacturing process involved crushing castor seeds to produce castor oil, which was then used to manufacture glycerine. The process included splitting the castor oil, separating fatty acids, and evaporating the lower layer to obtain crude glycerine, which was further purified. The Additional Collector argued that the machinery used for manufacturing glycerine was not relevant to oil mills or solvent extraction industries. The appellant relied on previous rulings, including Fertilizers Ltd. v. C.C.E. and C.C.E., Jaipur v. M/s. Jaipur Oil Products, to support their claim that glycerine should be classified under the oil mill and solvent extraction industry.

3. Interpretation of Manufacturing Process and Commercial Understanding of Glycerine:

The Tribunal examined whether the process of obtaining glycerine from castor oil could be considered part of the oil mill and solvent extraction industry. The Additional Collector's decision was based on the manufacturing process, while the appellant argued that glycerine was a by-product of the oil extraction process. The Tribunal noted that the Revenue's argument was based on the manufacturing process and not on commercial understanding. The Tribunal found that glycerine was indeed a product of the oil mill and solvent extraction industry, as it was obtained through the hydrolysis of castor oil.

Separate Judgments:

Member (J):
The Member (J) held that glycerine, obtained from castor oil in an oil mill or solvent extraction industry, was eligible for the exemption under Notification No. 115/75-C.E. The appeal was allowed based on the findings and previous rulings supporting the appellant's contention.

Vice President:
The Vice President disagreed, emphasizing the need for commercial understanding of glycerine. He noted that neither party provided sufficient commercial material to support their claims. He proposed setting aside the impugned order and remanding the case for de novo consideration to determine how glycerine is treated in trade and industry.

Third Member (T):
The Third Member (T) agreed with the Vice President, emphasizing the importance of commercial understanding for classification. The case was remanded for de novo consideration, aligning with the Vice President's view.

Final Order:
In view of the majority opinion, the impugned order was set aside, and the case was remanded for de novo consideration in accordance with the law and the observations of the Vice President.

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