Marketability and processing of clarified oil defeated excise exemption where the oil was not directly used in soap manufacture.

Clarified oil was treated as marketable goods for central excise purposes because the concurrent finding of marketability was not displaced by contrary material. It was also held to fall within processed vegetable non-essential oil, since bleaching during production brought it outside the exemption for unprocessed oils under Notification No. 33/63. The claimed exemption for use in soap manufacture failed because clarified oil was not directly used in making soaps; it first became hardened oil, a separate marketable commodity. Duty on clarified oil was therefore upheld and the writ petition failed.

---

---

Issues: (i) whether clarified oil was a marketable commodity and hence goods liable to central excise duty; (ii) whether clarified oil was a processed vegetable non-essential oil within Notification No. 33/63 and therefore outside the exemption; and (iii) whether clarified oil was exempt because it was used in the manufacture of soaps falling under Tariff Item No. 15.

Issue (i): whether clarified oil was a marketable commodity and hence goods liable to central excise duty.

Analysis: The Appellate Authority and the revisional authority had concurrently found that clarified oil was a marketable commodity. No material was placed before the Court to dislodge that finding. On that basis, the product answered the description of goods attracting duty.

Conclusion: The issue was decided against the assessee.

Issue (ii): whether clarified oil was a processed vegetable non-essential oil within Notification No. 33/63 and therefore outside the exemption.

Analysis: The notification exempted unprocessed vegetable non-essential oils, while the explanation treated bleaching, treatment with alkali or acid, and deodorization as processing. The authorities had found that the raw castor oil underwent bleaching in the course of production of clarified oil. That concurrent finding was accepted, and the product was held to be processed vegetable non-essential oil, not entitled to exemption.

Conclusion: The issue was decided against the assessee.

Issue (iii): whether clarified oil was exempt because it was used in the manufacture of soaps falling under Tariff Item No. 15.

Analysis: The claimed exemption under clause (b) of the notification required use in the manufacture of the specified finished goods. Clarified oil was not used directly in soap manufacture; it first became hardened oil, which was itself a marketable commodity capable of being sold independently. On that footing, the condition of use in the manufacture of soaps was not satisfied.

Conclusion: The issue was decided against the assessee.

Final Conclusion: The levy of duty on clarified oil was upheld, and the writ petition failed.

Ratio Decidendi: A product that is marketable and is obtained by a bleaching process from vegetable non-essential oil is a processed vegetable non-essential oil, and exemption under a notification limited to oil used in the manufacture of specified finished goods is unavailable where the oil is not directly so used.

---