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TMI Blog1989 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 46 of 1972, subsequently amended by notification Nos. 153 of 1973 dated 24-7-1973, and 25 of 1975 dated 1-3-1975. Even though there are three notifications, the point is common and both the appeals involve the same question. 3. The question arises this way. Ad valorem excise duty at 20% is levied on soap which falls under item 15 of the first schedule to the Act. Notification No. 46 of 1972 exempts "such soap as is made from indigenous rice bran oil or from a mixture of such oil with any other oils from so much of the duty of excise leviable thereon as is equivalent to the amount of duty calculated at the rate of one rupee and fifty paise per metric tonne of such soap for each additional percentage point increase in the use of such rice bran oil which is in excess of fifteen per cent of the total oils used in the manufacture of such soap". To put it in simpler words, the notification intends to grant a concession where the percentage of the rice bran oil used in the manufacture of soap exceeds fifteen per cent of the total oil consumption in the manufacture. The extent of exemption is graded according to the percentage of rice bran oil in excess of fifteen per cent. For example ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such and then subjected to various pre-treatments required for its use in the soap industry or whether the same could be treated outside the factory and the necessary fraction of the rice bran oil namely rice bran fatty acid required for the manufacture of soap alone could be brought into the factory as raw material and concession availed. It is not denied that for the use of rice bran oil, the same has necessarily to be pre-treated first and rice bran fatty acid is required to be separated from glycerine. The appellants in the instant case have only brought in the rice bran fatty acid which has been obtained from rice bran oil by a process of pre-treatment in one of their other factories. It is seen that the Government of India have clarified vide their letter No. P/92/2/72-CH. III dated 18-7-1974 that rice bran oil as such sometimes cannot be used directly and has to be subjected to pre-treatment before use in the manufacture of soap and that the exemption will be admissible in respect of rice bran oil even after pre-treatment for use in the manufacture of soap. Thus we find that the pre-treatment of rice bran oil is required to be done as a matter of necessity for its use in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich exemption is granted. So far as (b) is concerned, it is common ground before us that rice bran oil as such is not directly used in the manufacture of soap. Rice bran oil contains glycerol and other impurities which have to be removed by a process of hydrolysis or hydrogenation and it is only the resultant purified rice bran oil that is acutally used in the manufacture of soap. In fact, the Tribunal has given a clear finding that a pre-treatment to rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap. Thus even a factory which consumes rice bran oil in the manufacture of soap in its factory first converts the oil into hydrogenated oil or fatty acid and then manufactures soap out of the latter. So far as (a) is concerned, the object of the notification - as even the Tribunal finds - is to grant a concession to a manufacturer of soap who manufactures soap from rice bran oil to a substantial extent and thus discourage the use of edible oil in the manufacture. If these two aspects are considered together, it is clear that the emphasis in the notification is not that rice bran oil should be used as raw material in the very factory which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bran oil" and is entitled to the exemption under the notifications to the extent permissible thereunder. 8. Reference was made, in the course of the arguments before us, to a tariff advice issued as early as July 1974 by the Ministry of Finance in relation to the notification of 1972. It reads as under : "I am directed to invite a reference to this Ministry's notification No. 46/72 C.E. dated the 17th March, 1972, which grants exemption from duty on soap which is produced from rice bran oil or from a mixture of rice bran oil and other oils. It has been brought to the notice of this Ministry that the benefit of exemption is not being allowed by the Central Excise Officers where rice bran oil or oil mixture is hydrogenated or pre-treated before the soap is produced. The matter has been considered in detail with the concerned authorities and keeping in view the technical opinion tendered by them that rice bran oil as such sometimes cannot be used directly and has to be pre-treated before use in the manufacture of soap. It is hereby clarified that the exemption will be admissible when the rice bran oil is, after processing or pre-treatment, used in the manufacture of soap. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s difficulty has in fact been evolved and that, too, in the case of the same assessee. Our attention has been invited to a circular issued by the Assistant Collector, Ernakulam II dated 23-6-1977. This circular states that the matter had been considered pursuant to an appellate order passed in one of the cases relating to the same assessee and it had been decided to fix the formula for arriving at the correlation between rice bran oil on the one hand and hydrogenated rice bran oil or rice bran fatty acid on the other as below: (a) 100 M.T. of hydrogenated rice bran oil = 100 M.T. of rice bran oil (b) 100 M.T. of Fatty acid = 115 M.T. of raw rice bran oil The circular refers to the fact that the present assessee (in relation to its Cochin factory) had accepted the abovesaid formula and that the formula as given above was, therefore, "finally fixed in arriving at the rice bran oil contents of hydrogenated rice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant of prescribing a satisfactory procedure, especially, when it is contended by the manufacturers that they have opted for the rebate scheme, their factories are under excise control, they have sufficient documentary evidence about the receipt, processing, movement, incorporation/use in the manufacture of soap. If, as contended by the manufacturers, there is sufficient record maintained by them for excise purposes and the reasonable correlation is possible about the identity and use of such oils it would not be correct to deny the concession. In this connection, it is of relevance to mention that a problem of similar nature had arisen with reference to some other excisable productt and the Law Ministry was also consulted. An extract of their opinion is appended. It is, therefore, requested that taking into account the local practical situations existing in his jurisdiction, the Collector may prescribe suitable procedures for identification of such oils for a meaningful implementation of the Rebate Scheme. A copy of the Trade Notice issued in this regard by the Collector may be sent to DICCE under intimation to this Ministry." Following this, trade notices were issued on 25-8-1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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