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TMI Blog1988 (12) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... T for short) to the Central Excises Salt Act, 1944 (the Act for short). In terms of Notification No. 201/79, dated 4-6-1979 issued by the Central Government under Rule 8(1) of the Central Excise Rules, 1944, all excisable goods, on which excise duty was leviable, were exempted from the excise duty leviable thereon to the extent of the excise duty already paid on any goods falling under Item 68, CET (the inputs , for brevity s sake) and which had been used in the manufacture of the said excisable goods. The respondents were getting duty-paid Hardened Rice Bran Oil ( HRBO , for short) and using it in the manufacture of soap after removing the dark colour of the oil. In the process, they were availing themselves of the benefit of set-off of the duty already paid on HRBO against the duty payable on the finished product, namely, soap in terms of Notification 201/79, dated 4-6-1979. It appears that duty had been charged on the HRBO under Item 68 of the CET. The Tribunal had held in several decisions that Hardened Technical Oil which would include HRBO was classifiable under Item 12, CET as a sort of vegetable non-essential oil and not under Item 68, CET. It would appear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t [see Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd. - 1989 (40) E.L.T. 287 (S.C.)], was classifiable under Item 12 and not 68, CET. Since Notification 201/79 permitted the input duty relief only if duty on the input had been paid under Item 68, CET, the notification had no application to the instant case. (b) Whether the HRBO fell under Item 68 or 12 was not the real issue. It was, whether the activity of bleaching HRBO in the respondents factory was an activity which attracted duty. According to the Revenue, it was. For this purpose, the D.R. relied on para 19 of the Supreme Court s judgment in Union of India Ors. v. Delhi Cloth General Mills Co. Ltd Ors. - 1977 E.L.T. (J 199). In that judgment, the Court had held that the wording of the item for Vegetable Non-essential Oils read with Section 2(f) of the Act made it clear beyond controversy that if power was used for any one of the numerous processes required to turn raw materials into finished, article known to the market, an argument that power was not used in the whole process of manufacture would not be available. Bleaching was one form of process in accordance with the Explanation to Notification 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification 33/63. To the same effect was the Bombay High Court judgment in Ahmed Oomerbhoy Mills v. Union of India Another - 1986 (25) E.L.T. 513 (Bom.) and Indian Vegetable Products Ltd. v. Union of India Ors. - 1980 E.L.T. 704. 7. Replying to the above submissions, Shri Lodha, learned counsel for the respondents, drew our attention to Trade Notice No. 125/CL-36/1980, dated 21-3-1980 issued by the Collector of Central Excise, Calcutta on the question of availability of proforma credit under Rule 56A where an intermediate product which was fully exempt from duty came into being during the process of manufacture of a notified finished product. The Trade Notice clarified that in such a case proforma credit would be permissible provided the exempted intermediate product was consumed within the factory of manufacture of the notified finished product. However, credit would not be available if the intermediate product was removed as such from the factory. The Trade Notice also clarified that it would hold good in respect of Notification 201/79 as well. 8. Shri Lodha submitted that the respondents had, right from the beginning, taken the stand that HTO was classifiable under Item 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not the Assistant Collector at the receiving factory who had no jurisdiction or power of assessment on those goods. 10. On the issue of classification of HRBO, the Counsel submitted that the Supreme Court had finally settled it under Item 12, CET, upholding the Tribunal s order in Jayant Oil Mills case [see Supreme Court s judgment in Jayant Oil Mills -1989 (40) E.L.T. 287]. Our attention was also drawn to the Supreme Court s judgment in Tata Oil Mills Co. v. Collector of Central Excise - 1989 (2) S.C.ALE 313. The issue therein was whether Tata Oil Mills were eligible to the benefit of Notification 46/72 as amended by Notifications 153/73, dated 24-7-1973 and 25/75, dated 1-3-1975, which sought to give a duty concession where the percentage of rice bran oil used in the manufacture of soap exceeded 15% of the total oil consumed. The process of manufacture in TOMCO s case did not involve the use of rice bran oil as such. It involved rice bran fatty acid extracted from rice bran oil in another factory belonging to the TOMCO. The excise authorities denied the benefit of the notifications on the ground that rice bran fatty acid and rice bran oil were different and not one and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to Item 68, contrary to the Supreme Court judgment. The Departmental Representative also submitted that the respondents were not entitled to get refund of the duty paid on HRBO because they were only consumer of the product. If there was erroneous assessment of HRBO, the manufacturer of that product who had paid duty thereon was the one who, if at all, was entitled to get refund of the duty paid. Shri Sunder Rajan, the learned Departmental Representative, also submitted that the Supreme Court judgment in the case of Tata Oil Mills Co. Ltd. - 1989 (2) Scale 313 was not relevant to the instant case since it was in the context of other notifications. 13. We have set out at length the rival submissions. But, it is not, in our view, necessary to discuss all of them for the present purpose. 14. At the outset, we must say that we find no force in Shri Sunder Rajan s objection to the ground raised by the respondents Counsel on the Assistant Collector s jurisdiction and competence to re-classify the goods under Item 12, CET. Jurisdiction, as is well-settled, goes to the root of the case and the question of jurisdiction could be raised at any time in the proceeding. It is not necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt judgment in Rajendra Oil Mills case (supra) and the Bombay High Court judgment in Indian Vegetable Products Ltd. (supra) is of no avail. Our attention was drawn to the submission made before the Tribunal in TOMCO case - 1986 (24) E.L.T. 290 para 17 - that the S.L.P. against the Andhra Pradesh High Court judgment in Rajendra Oil Mills case had been dismissed by the Supreme Court. No copy of the Supreme Court s judgment was produced before us. In the case before the Andhra Pradesh High Court, the Court held that clarified (bleached) oil could not be said to have been used direct in the manufacture of soap since it was first converted into hardened oil which was itself a marketable commodity. This was in the context of Notification 33/63 which was in relation to VNE oil under Item 12, CET. The question before us in the instant case has, however, to be resolved on the factual basis of classification of HRBO under Item 68, CET. The question considered by the Andhra Pradesh High Court, therefore, does not arise in the instant case. In any event, the Supreme Court in the case of Tata Oil Mills Co. Ltd. [1989 (2) Scale 313] has negatived the Department s contention that indirect use o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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