Marketable by-product exemption for soap stock arising in Vanaspati manufacture under the relevant excise notification.

Soap stock arising in the manufacture of Vanaspati by an oil mill was treated as a marketable by-product and, therefore, as excisable goods satisfying the twin requirements of manufacture and marketability. On that basis, it fell within Notification No. 115/75-C.E. dated 30-04-1975 and was held eligible for exemption. Earlier decisions involving solvent extraction units were distinguished as not laying down a controlling rule against this treatment. The operative effect is that the exemption applied to the by-product generated in the course of Vanaspati manufacture.

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Issues: Whether soap stock arising in the course of manufacture of Vanaspati was eligible for exemption under Notification No. 115/75-C.E. dated 30-04-1975.

Analysis: The goods emerged in the course of manufacture of Vanaspati by an oil mill industry. Soap stock was held to be a marketable product, satisfying the twin requirements of manufacture and marketability for excisability. The Revenue did not dislodge the position that Vanaspati manufactured by an oil mill was covered by the exemption notification, nor was it disputed that the soap stock was marketable. The Tribunal distinguished earlier decisions involving solvent extraction units and proceeded on the basis that those decisions did not lay down a controlling ratio against the assessee.

Conclusion: The soap stock was entitled to exemption under Notification No. 115/75-C.E. dated 30-04-1975, and the appeal was allowed in favour of the assessee.

Final Conclusion: The impugned demand did not survive, as the by-product generated in the manufacture of Vanaspati was held to be exempt and the assessee succeeded.

Ratio Decidendi: A by-product arising in the manufacture of Vanaspati by an oil mill is exempt where it is marketable and satisfies the twin test of manufacture and marketability under the relevant exemption notification.

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