1998 (3) TMI 198 - AT - Central Excise

Summary

Issues: Waiver of pre-deposit and stay of recovery of demanded amount due to discrepancy in goods received - Interpretation of notification regarding the use of specific raw material in manufacturing process.

Analysis:

The appellant sought a waiver of pre-deposit and stay of recovery of the demanded amount due to receiving DFA instead of Hydrolysed/Hydrogenated rice bran oil. The Legal Manager argued that the DFA obtained was derived from hydrogenated rice bran oil, supported by evidence from the supplier's gate pass. Citing the Apex Court's judgment in Tata Oil Mills Co. Ltd. v. Collector of Central Excise, the Legal Manager contended that the notification's purpose is to encourage the use of rice bran oil in soap manufacture, not necessarily the direct use of rice bran oil in the factory. The Tribunal agreed with this interpretation, emphasizing that the conversion of rice bran oil into hydrogenated oil or fatty acid is a common practice in soap manufacturing. Consequently, the Tribunal allowed the appeal, granting the appellants the benefit of the notification.

The Respondent argued that the appellant did not bring hydrogenated rice bran oil as permitted but instead brought distilled fatty acid. The Respondent contended that the controversy revolved around whether distilled fatty acid is equivalent to hydrogenated rice bran oil, impacting the eligibility for the benefit of money credit. However, the Tribunal found that the origin of distilled fatty acid from hydrogenated rice bran oil was not disputed, supported by evidence in the case. Referring to the Apex Court's judgment in Tata Oil Mills, the Tribunal concluded that the appellants were entitled to the benefit of the notification, as the purpose was to promote the use of rice bran oil in soap manufacturing, irrespective of the form in which it is utilized. As a result, the appeal was allowed, and the stay petition was disposed of accordingly.