1988 (11) TMI 109 - SC - Central Excise

Supreme Court Broadens Interpretation of 'Bone Products' for Excise Duty Exemption

COLLECTOR OF CENTRAL EXCISE Versus PROTEIN PRODUCTS OF INDIA

The Supreme Court upheld the Customs, Excise and Gold (Control) Appellate Tribunal's decision to grant excise duty exemption to a company manufacturing ... Whether the products in question retain the principal characteristics and physical properties of crushed bones? Held that:- The products in question are derived merely by the extraction of the mineral parts of the bones. Gelatine is obtained by a further treatment, with an alkali, of the ossein manufactured from the bones. It is the collagen which forms the organic content of the bones and is utilised in the manufacture of ossein and gelatine. The word 'product' is defined in Webster's Comprehensive Dictionary as 'anything produced or obtained as a result of some operation or work'. The expression 'bone products' therefore merely means anything produced or obtained from bones. Whether such derivation is by a simple physical process or by a chemical reaction would seem to make no difference to the end product. Buttermilk, for instance, does not cease to be a milk product merely because a chemical process is involved in the transformation. The ossein and gelatine manufactured by the respondent can, without straining the expression used in the notification, be described as bone products. We are, therefore, in agreement with the view taken by the Tribunal that the products manufactured by the respondent company to the exemption under the Notification dated 30-6-1975. Appeal dismissedf Issues:Interpretation of the term 'bone products' for excise duty exemption under a government notification.Analysis:The case involved a dispute regarding excise duty exemption claimed by a company manufacturing ossein and gelatine from bones. The company argued that its products fell under the category of 'bone products' as per a government notification dated 30-6-1979. The Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) supported the company's claim, stating that the products were derived from crushed bones, thus qualifying as 'bone products' under the notification.The appellant, represented by the Solicitor General, contended that the term 'bone products' should be limited to primary products like bone sinew, bone grist, and bone meal obtained directly from crushed bones. The appellant argued that ossein and gelatine, although derived from bones, could also be obtained from other sources like pig skin and hides, and hence should not be considered 'bone products.'The Supreme Court, in its judgment delivered by Ranganathan, J., rejected the appellant's argument. The Court held that the notification only referred to 'crushed bones and bone products,' without specifying any limitation on the nature of products entitled to exemption. The Court emphasized that the term 'bone products' should be broadly interpreted to include any product derived from bones, whether through physical or chemical processes.The Court reasoned that since the company's products were derived solely from bones, utilizing collagen from the organic content of bones, they could be rightfully classified as 'bone products.' The Court cited examples like buttermilk, where a chemical process does not change the product's classification. Therefore, the ossein and gelatine manufactured by the company were deemed to qualify for the excise duty exemption under the notification.Additionally, the Court referenced a previous judgment to highlight the limited scope of interference in CEGAT decisions. The Court emphasized that as long as the Tribunal considers all relevant factors and acts in accordance with principles of natural justice, a different interpretation by another court is not sufficient grounds for interference. Consequently, the Court dismissed the appeal, affirming the Tribunal's decision to grant the excise duty exemption to the company's products.In conclusion, the Supreme Court's judgment clarified the interpretation of 'bone products' for excise duty exemption, emphasizing a broad understanding that includes products derived from bones through various processes. The Court upheld the Tribunal's decision, highlighting the importance of considering all relevant factors and principles of natural justice in such matters.