1984 (10) TMI 233 - AT - Central Excise

Tribunal reclassifies hardened plant oils, aligns with Supreme Court precedent on vegetable non-essential oils

The Tribunal classified hardened rice bran oil, hardened castor oil, and hardened linseed oil under Tariff Item 12, as they were deemed to remain ... - Issues Involved:1. Classification of hardened rice bran oil, hardened castor oil, and hardened linseed oil under Central Excise Tariff.2. Applicability of Tariff Item 12 versus Tariff Item 68 for the said oils.3. Interpretation of the Supreme Court's judgment in Tungabhadra Industries case.4. Relevance of chemical changes during hydrogenation in determining classification.5. Comparison with previous Tribunal decisions and High Court rulings.Detailed Analysis:1. Classification of Hardened Oils:The appellants, M/s. Vital and Vital Oil Pvt. Limited, requested that hardened rice bran oil, hardened castor oil, and hardened linseed oil be classified under Tariff Item 12, arguing they remain vegetable non-essential oils (VNE oils) despite the hardening process. The Assistant Collector and Collector of Central Excise (Appeals) classified these oils under Tariff Item 68, leading to the present appeal.2. Applicability of Tariff Item 12 vs. Tariff Item 68:The Tribunal examined whether the hardened oils should be classified under Tariff Item 12, which covers VNE oils, or under Tariff Item 68, which is a residual category for goods not specified elsewhere. The Tribunal noted that previous decisions in Hindustan Lever Limited and Jayalakshmi Cotton & Oil Products Limited classified similar hardened oils under Tariff Item 12. However, an earlier decision in Veg Oils Limited classified extra hardened technical oil under Tariff Item 68.3. Interpretation of Supreme Court's Judgment in Tungabhadra Industries Case:The Tribunal extensively discussed the Supreme Court's judgment in Tungabhadra Industries, where it was held that hydrogenated groundnut oil remained groundnut oil despite undergoing chemical changes. The Tribunal found that this principle applied to the present case, as the essential nature of the oils did not change with hardening.4. Relevance of Chemical Changes During Hydrogenation:The Tribunal acknowledged that hydrogenation causes chemical changes, as noted in the Tungabhadra Industries case. However, it emphasized that these changes do not alter the fundamental nature of the oils. The Tribunal rejected the argument that chemical changes necessitate reclassification under Tariff Item 68, maintaining that the oils remain VNE oils.5. Comparison with Previous Tribunal Decisions and High Court Rulings:The Tribunal considered the conflicting decisions in Veg Oils Limited and the Gujarat High Court's decision in Navasari Oil Product Limited. It concluded that the decisions in Hindustan Lever Limited and Jayalakshmi Cotton & Oil Products Limited were more consistent with the Supreme Court's judgment in Tungabhadra Industries. The Tribunal also dismissed the relevance of the Assistant Collector's order classifying hardened rice bran oil under Tariff Item 12, focusing instead on the legal principles established by higher judicial authorities.Conclusion:The Tribunal held that the three hardened oils in question should be classified under Tariff Item 12, aligning with the Supreme Court's interpretation in Tungabhadra Industries. The orders of the lower authorities classifying the oils under Tariff Item 68 were set aside, and the appeal was allowed with consequential relief. The Tribunal found no need to refer the matter to a Special Bench, affirming the applicability of Tariff Item 12 to the hardened oils.