Hydrogenated oil rebate and tariff classification depend on prescribed standards and intended use, not later alleged unfitness.

Hydrogenated cotton seed oil qualified for rebate under Notification No. 121/72-C.E. only if it satisfied the prescribed melting point and testing standards; failure of the sample to meet that standard meant the rebate was not available. Vegetable product manufactured from oil hardened by hydrogenation for human consumption remained within Item 13 of the Central Excise Tariff even if the finished product was later said to be unfit for human consumption, so duty remained payable. Where no intervening sample was drawn between 22-8-1972 and 5-9-1972, the test result of the sample taken on 22-8-1972 governed the batches manufactured during that period.

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Issues: (i) Whether rebate under Notification No. 121/72-C.E. was admissible when the hydrogenated cotton seed oil did not satisfy the prescribed melting point standard; (ii) whether vegetable product manufactured from such oil escaped duty under Item 13 of the Central Excise Tariff because it was unfit for human consumption; (iii) whether the test result of the sample drawn on 22-8-1972 applied to the batches manufactured up to 5-9-1972.

Issue (i): Whether rebate under Notification No. 121/72-C.E. was admissible when the hydrogenated cotton seed oil did not satisfy the prescribed melting point standard.

Analysis: The notification granted rebate with reference to the percentage of indigenous cotton seed oil used. The authority held that acceptance of the oil as hydrogenated cotton seed oil depended upon compliance with the prescribed melting point and testing standards. Where the sample failed to satisfy that standard, the oil could not qualify for the rebate intended for conforming indigenous cotton seed oil.

Conclusion: The rebate was not admissible, and this contention failed against the assessee.

Issue (ii): Whether vegetable product manufactured from such oil escaped duty under Item 13 of the Central Excise Tariff because it was unfit for human consumption.

Analysis: Item 13 covered vegetable oil or fat hardened by hydrogenation or any other process for human consumption. The authority held that the relevant test was the process of hydrogenation undertaken with a view to making the oil fit for human consumption. If the resulting product in fact turned out to be unfit, that did not take it outside Item 13.

Conclusion: The product remained dutiable under Item 13, and this contention was rejected.

Issue (iii): Whether the test result of the sample drawn on 22-8-1972 applied to the batches manufactured up to 5-9-1972.

Analysis: Since no sample was drawn by the VOP Directorate between 22-8-1972 and 5-9-1972, the only available test result was treated as governing the intervening batches. The authority therefore applied that result to the goods produced during that period.

Conclusion: The test result applied to all batches manufactured between 22-8-1972 and 5-9-1972.

Final Conclusion: The revision application failed in entirety, with rebate denied, duty liability sustained, and the sample test results applied to the relevant production period.

Ratio Decidendi: For rebate and duty purposes, compliance with the prescribed standards for hydrogenated oil is ative, and a product hydrogenated for human consumption remains classifiable and dutiable under the tariff even if the final product is alleged to be unfit for such consumption.

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