1993 (9) TMI 316 - AT - Central Excise

Tribunal Rules on Jurisdiction Over Cess Levies in Oil Extraction Cases

ANDHRA SUGARS LTD. Versus COLLECTOR OF CENTRAL EXCISE, GUNTUR

ANDHRA SUGARS LTD. Versus COLLECTOR OF CENTRAL EXCISE, GUNTUR - 2004 (175) E.L.T. 834 (Tri. - Del.) Issues Involved:1. Jurisdiction of adjudication and issuance of revised show cause notice.2. Levy of cess on cotton-seed oils extracted by expeller and solvent extraction methods.3. Validity of demand proceedings under Section 11A of the Central Excises and Salt Act, 1944.4. Interpretation of 'vegetable oil' under the National Oilseeds and Vegetable Oils Development Board Act, 1983.Detailed Analysis:1. Jurisdiction of Adjudication and Issuance of Revised Show Cause Notice:The appellants contended that the revised show cause notice dated 31-1-1986 was issued without jurisdiction by the Superintendent of Central Excise and adjudicated by the Assistant Collector. They argued that the Central Excises and Salt (Amendment) Act, 1985, effective from 27-12-1985, mandated that all pending proceedings should be transferred to the Collector of Central Excise. Thus, the de novo adjudication should have been initiated by the Collector. The Tribunal agreed with this contention, citing precedents such as Ravi Engineering Works v. Union of India and Woodcrafts v. Collector of Central Excise, which supported the view that only the Collector had jurisdiction to issue such notices post-amendment.2. Levy of Cess on Cotton-Seed Oils Extracted by Expeller and Solvent Extraction Methods:The dispute centered on whether cotton-seed oils extracted by the expeller method and the solvent extraction method qualify as 'vegetable oil' under the National Oilseeds and Vegetable Oils Development Board Act, 1983. The Tribunal referred to the Bombay High Court's judgment in Bhasir Oil Mills v. Union of India, which held that oil extracted from oil cakes by the solvent extraction process is not 'vegetable oil' but a distinct commercial commodity. Consequently, no cess could be levied on such oil under Section 3 of the Cess Act. The Tribunal upheld the levy of cess on cotton-seed oil extracted by the expeller method, aligning with its decision in Jayalakshmi Cotton and Oil Products (P) Ltd. v. Collector of Central Excise.3. Validity of Demand Proceedings under Section 11A of the Central Excises and Salt Act, 1944:The appellants argued that the demand proceedings were barred by limitation under Section 11A (1) of the Central Excises and Salt Act, 1944, as there was no wilful mis-statement or suppression of facts. The Tribunal considered the amendment to Section 11A, which required that only the Collector could issue show cause notices for recovery extending beyond the normal period of limitation. The Tribunal found that the revised show cause notice issued by the Superintendent after the amendment was void ab initio, as only the Collector had the jurisdiction to issue such notices.4. Interpretation of 'Vegetable Oil' under the National Oilseeds and Vegetable Oils Development Board Act, 1983:The appellants contended that the definition of 'vegetable oil' excluded oils subjected to any processing subsequent to recovery. They argued that cotton-seed crude oil, which is not edible in crude form, should not be liable to cess as per Section 3 of the Vegetable Oil Cess Act. The Tribunal rejected this interpretation, stating that the Act covers all vegetable oils produced from oil seeds or any other oil-bearing material of plant origin, not restricted to edible oils. The Tribunal emphasized that the exclusion applies only to oils processed further after extraction, not to raw or crude oils.Separate Judgments:1. Member (Judicial): Concurred with the appellants' view that the revised show cause notice was without jurisdiction and held that no cess could be levied on oil extracted by the solvent extraction method, aligning with the Bombay High Court's judgment.2. Vice-President: Disagreed, stating that the solvent extraction process is a recognized method for recovering oil from oilseeds, and thus, such oil should be liable to cess. He also upheld the validity of the revised show cause notice and adjudication by the Assistant Collector.3. Member (Technical): Agreed with the Member (Judicial), emphasizing the binding nature of the Bombay High Court's judgment and the lack of jurisdiction for the revised show cause notice issued by the Superintendent post-amendment.Final Order:In view of the majority opinion, the appeals were accepted, and the revised show cause notice and the demand for cess on oil extracted by the solvent extraction method were set aside.