1996 (5) TMI 263 - AT - Central Excise

Issues Involved:
1. Grant of money credit in respect of minor oil used in the manufacture of vegetable products under Rule 57K read with Notification No. 45/89.
2. Interpretation of Rule 57K and Notification No. 45/89 regarding the quantum of oil eligible for money credit.

Issue 1: Grant of Money Credit in Respect of Minor Oil Used in the Manufacture of Vegetable Products

The appellants sought money credit for the quantum of raw oil taken into processing and used in the manufacture of vanaspati products. The authorities, however, restricted the benefit to the quantum of minor oil that emerged after processing and was used for hydrogenation.

The learned Advocate for the appellants conceded that the issue is covered against them by a previous decision of the West Regional Bench in the same appellant's case (1996 (83) E.L.T. 610). The Tribunal held that the Government's intention was to give exemption only with reference to the weight of minor oils present in the total weight of the mixture of oils immediately before hydrogenation, not the quantity of raw oil drawn for hydrogenation.

The Tribunal emphasized that Notification No. 45/89, read in the context of the preceding exemption Notification No. 115/86-C.E., clearly indicated that the exemption or credit was intended only for the quantity of oil subjected to hydrogenation.

Issue 2: Interpretation of Rule 57K and Notification No. 45/89 Regarding Quantum of Oil Eligible for Money Credit

The appellants argued that the Tribunal should have considered the wording of Rule 57K itself, rather than the earlier notification, to determine the quantum of relief. Rule 57K specifies that the benefit is for raw materials used in the manufacture of notified finished products. The learned Advocate contended that the term "raw materials" should include the material taken into processing before it reaches the stage for hydrogenation.

The learned JDR countered that the notification clearly envisages credit only for the quantity of oil or fat subjected to hydrogenation. Thus, only the quantum taken for hydrogenation qualifies for the benefit.

Upon considering both sides, the Tribunal observed that Rule 57K provides for money credit for certain raw materials used in the manufacture of specified finished products, subject to the conditions in the notification. Notification No. 45/89 specifies that credit is only for the quantity of oil or fat subjected to hydrogenation, not the total quantum taken into processing as raw materials.

The Tribunal noted that the machinery provisions in the notification need not correspond exactly to the main rule under which the concession is given, as per the Supreme Court's observation in Bombay Tyre Internationals (1983 (14) E.L.T. 1896). The extent of the concession is defined by the parameters set out in the notification.

The Tribunal also referenced the Supreme Court's judgment in The Tata Oil Mills Co. Ltd. (1989 (43) E.L.T. 183), which held that notifications should be interpreted in a manner that effectuates their purpose and benefits the assessee. However, the Tribunal concluded that interpreting the notification to restrict the benefit to the quantity of oil subjected to hydrogenation does not contravene this guideline.

Therefore, the Tribunal upheld the lower authority's order and dismissed the appeals, affirming that the benefit of money credit is restricted to the quantity of oil subjected to hydrogenation as per Notification No. 45/89.

← Previous Next →