Marketable by-products are not "waste" for exemption; conflicting Bench views led to reference to a Larger Bench.

By-products arising in the refining of crude vegetable oil, including fatty acids, wax and gum, were treated as marketable commercial products and not as "waste" for exemption under Notification No. 89/95-CE. The reasoning distinguished waste as refuse or discarded material having little or no value fit only to be discarded, whereas commercially valuable by-products fell outside that description. A contrary coordinate Bench view was held incorrect, but conflicting Bench decisions and prior proceedings created sufficient doubt to warrant authoritative resolution. The issue was therefore referred to the Hon'ble President for constitution of a Larger Bench.

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Issues: Whether fatty acids, wax and gum arising in the course of refining of crude vegetable oil are to be treated as "waste" for the purpose of exemption Notification No. 89/95-CE and whether the matter required reference to a Larger Bench in view of conflicting coordinate Bench decisions.

Analysis: The by-products generated in refining of crude vegetable oil were held to be marketable commercial products rather than refuse or discarded material. A marketable by-product with commercial value was distinguished from waste, which was understood to mean only material of no or little value fit to be discarded. The view taken in one coordinate Bench decision granting exemption to such by-products was held to be incorrect, but the existence of conflicting Bench decisions and the prior dismissal of civil appeal against the contrary view created substantial doubt on the issue. In these circumstances, the matter was considered fit for authoritative determination by a Larger Bench.

Conclusion: The by-products were not accepted as "waste" for the exemption, and the controversy was referred to the Hon'ble President for constitution of a Larger Bench to decide the question.

Final Conclusion: The appeals were not finally decided on the substantive exemption claim and were disposed of by directing reference of the issue to a Larger Bench.

Ratio Decidendi: For exemption notifications using the expression "waste", only by-products in the nature of refuse or discarded material with no or little commercial value are covered, not marketable by-products with substantial value.

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