Excise on incidental waste from vegetable oil refining rejected where spent earth was not intentionally manufactured and fell under exemption.

Spent earth arising incidentally during refining of crude vegetable oil was treated as waste, not as a separately manufactured excisable product, because excise liability depends on manufacture of a marketable product and incidental emergence alone does not create duty liability. The refining process was aimed at producing refined oil by removing unwanted material, and the residual spent earth was not intentionally manufactured. The exemption notification therefore applied, and the spent earth was not liable to central excise duty.

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Issues: Whether spent earth arising during the refining of exempt vegetable oil is liable to central excise duty, or is to be treated as waste covered by the exemption notification.

Analysis: The product in dispute arose incidentally in the process of refining crude vegetable oil into refined oil. The reasoning applied the settled principle that excise liability depends on manufacture of a marketable product, and that the mere saleability of an incidental emergence does not make it manufactured goods. The controlling consideration was that the refining process is directed to obtaining refined oil by removing unwanted materials, and the residual emergence is not intentionally manufactured. In view of the consistent view that such incidental products are waste and not excisable manufactured goods, the exemption notification applied.

Conclusion: The spent earth was not separately liable to excise duty and was covered by the exemption notification. The finding was in favour of the assessee.

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