Exemption for by-products in composite oil mill and solvent extraction factories extends to integrated manufacture under Notification No. 115/75-CE

Goods emerging as by-products from an integrated crushing, solvent extraction and refining unit were treated as eligible for exemption under Notification No. 115/75-CE. The exemption, issued for factories in the specified oil mill and solvent extraction industry, was held to attach to the composite factory itself and not only to the main edible oil product. On that reasoning, by-products manufactured in the same integrated process also fell within the notification, and the Revenue's challenge failed.

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Issues: Whether goods emerging as by-products from refining activity in a composite factory engaged in crushing of seeds and solvent extraction of oil are entitled to exemption under Notification No. 115/75-CE.

Analysis: The exemption notification, issued under rule 8(1) of the Central Excise Rules, 1944, extends to goods manufactured in factories covered by the specified industries, including oil mill and solvent extraction industry. The decisive factor was that the factory was a composite unit with facilities for crushing seeds and solvent extraction, and the authorities had already taken the view in earlier decisions that products emerging from such integrated manufacture remained eligible for the exemption. The reasoning adopted was that the notification was not confined only to the main edible oil product and covered the goods manufactured in such a factory.

Conclusion: The by-products were held to be eligible for exemption under Notification No. 115/75-CE, and the Revenue's challenge failed.

Ratio Decidendi: Where a factory falls within the specified industry and carries out integrated crushing, solvent extraction and refining operations, the exemption attached to the factory extends to the goods manufactured therein, including by-products emerging from the process.

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