1980 (9) TMI 90 - CGOVT - Central Excise

Government restores duty on palmolein imports, importers must pay; clarifies distinction from palm oil

The Government of India set aside the impugned order-in-appeal and restored the orders of the original authority, concluding that additional duty is ... Palmolein is not a sort of palm oil - Taxing statute - Canons of interpretation - Exemption Issues Involved:1. Whether countervailing duty or additional duty is chargeable on palmolein imported into India.2. Whether palmolein and palm oil are distinct products for the purposes of taxation.3. Applicability of exemption Notification No. 150/64-C.E. to palmolein.4. Relevance of the concept of 'manufacture' in levying customs duty on imported goods.5. Classification of palmolein under the Customs Tariff Act, 1975.6. Burden of proof for claiming exemption from duty.Detailed Analysis:1. Chargeability of Additional Duty on Palmolein:The central issue was whether the appellate order exempting palmolein from additional duty was correct. The Government's tentative view, communicated in the Show Cause Memorandum, was that additional duty was chargeable on palmolein as it was distinct from palm oil and not covered by the exemption notification. The importers argued that palmolein should be treated as palm oil and thus exempt from additional duty. However, the Government concluded that additional duty is leviable on palmolein, as it is distinct from palm oil and not covered by the exemption notification.2. Distinction Between Palmolein and Palm Oil:The importers contended that palmolein is just a processed form of palm oil and should be treated the same for tax purposes. The Government, however, noted that palmolein and palm oil have distinct names, chemical properties, and uses. Palmolein is the liquid fraction of palm oil, obtained through fractionation, a process that creates a product distinct from palm oil. The Government emphasized that palmolein and palm oil are recognized as different products in trade and have separate ISI standards, thus supporting the view that they are distinct for taxation purposes.3. Applicability of Exemption Notification No. 150/64-C.E.:The importers argued that palmolein should be exempted under Notification No. 150/64-C.E., which exempts palm oil. The Government rejected this argument, stating that the notification specifically exempts only palm oil and not 'all sorts' of palm oil. The absence of the suffix 'all sorts' means that the exemption cannot be extended to palmolein, which is a distinct product from palm oil. The Government concluded that the exemption notification should be strictly construed and does not cover palmolein.4. Relevance of 'Manufacture' in Levying Customs Duty:The importers relied on various judicial decisions to argue that palmolein should not be considered a distinct product from palm oil because the process of obtaining palmolein from palm oil does not constitute 'manufacture.' The Government disagreed, stating that the concept of 'manufacture' under the Central Excise Act is not relevant for levying customs duty on imported goods. The taxing event for customs duty is the importation of goods, not their manufacture. The Government emphasized that palmolein, being a distinct product from palm oil, is subject to additional duty irrespective of whether its production involves 'manufacture.'5. Classification Under the Customs Tariff Act, 1975:The importers argued that palmolein should be classified under heading 15.07(3) of the Customs Tariff Act, 1975, which covers palm oil. The Government disagreed, stating that for levying additional duty, the classification should be under the Central Excise Tariff. Palmolein, being a V.N.E. oil, falls under item 12 of the Central Excise Tariff. Even under the Customs Tariff, palmolein should be classified under heading 15.07(1), which covers fixed vegetable oils other than soyabean oil and palm oil. The Government concluded that palmolein does not fall under the same classification as palm oil for the purposes of additional duty.6. Burden of Proof for Claiming Exemption:The Government emphasized that the burden of proof for claiming exemption lies with the assessee. The importers failed to establish that palmolein falls under the exemption provided for palm oil in Notification No. 150/64-C.E. The Government cited the Supreme Court's decision in Commissioner of Income Tax, Bihar and Orissa v. Ramakrishna Deo, which states that it is the responsibility of the person claiming exemption to prove its applicability.Conclusion:The Government of India set aside the impugned order-in-appeal and restored the orders of the original authority, concluding that additional duty is leviable on palmolein. The importers are required to pay the additional duty if it has already been refunded. The judgment emphasizes the distinct nature of palmolein from palm oil and the strict interpretation of exemption notifications.