1999 (4) TMI 216 - AT - Central Excise

Processed oil eligible for benefit of exemption under Notification No. 33/63-C.E. as amended.

Summary

Issues:
1. Interpretation of Notification 33/63 regarding processed vegetable non-essential oils used in soap manufacturing.
2. Whether hydrogenation of oil amounts to manufacturing and affects the classification under the tariff.
3. Applicability of Supreme Court judgments in similar cases to the present scenario.
4. Impact of further processing, specifically hardening, on the eligibility for exemption under the notification.

Analysis:
1. The case involved the appellant manufacturing special vegetable non-essential oil processed through alkali, bleaching, and hydrogenation to produce hardened technical oils used in soap manufacturing under Chapter X procedure. The appellant sought exemption under Notification 33/63 for processed vegetable oils used in soap production.

2. The issue arose when the authorities proposed denial of the notification, arguing that hydrogenation did not constitute processing and the oil was not eligible for exemption. The appellant argued that even after hydrogenation, the oil remained processed vegetable oil, citing the Supreme Court judgment in Collector v. Jayant Oil Mills.

3. The appellant contended that hydrogenation did not change the classification of the oil under the tariff and relied on precedents like Tata Oil Mills Co. Ltd. v. Collector. The Departmental representative argued that hydrogenation altered the nature of the oil significantly, making it ineligible for the notification's benefit.

4. The Supreme Court's judgment in Jayant Oil Mills clarified that unless hydrogenation resulted in the oil being classified as vegetable oil under the tariff, it would remain classified as oil under Item 12. The Explanation to Notification 33/63 supported the view that hardening through hydrogenation did not disqualify the oil from being considered processed oil, thus maintaining eligibility for the notification.

In conclusion, the Tribunal allowed the appeal, granting consequential relief to the appellant based on the interpretation that the processed oil, even after hardening through hydrogenation, remained eligible for the benefit under Notification 33/63 when used in soap manufacturing.