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Issues: Whether fatty acid, wax and gum arising in the course of manufacture of refined vegetable oil are to be treated as waste and eligible for exemption under Notification No. 89/1995-C.E. dated 18.05.1995.
Analysis: The issue was covered by the Larger Bench decision holding that the value fetched by such products is not determinative of their character, and that incidental products arising from the refining process are not manufactured excisable goods but waste arising during the course of manufacture. On that reasoning, such products fall within the exemption intended for waste, and the contrary view treating them as by-products was not accepted. Since the substantive issue was decided on merits, limitation did not require separate examination.
Conclusion: Fatty acid, wax and gum were held to be waste and entitled to exemption under Notification No. 89/1995-C.E. dated 18.05.1995; the demand was therefore unsustainable and the appeal succeeded in favour of the assessee.
Final Conclusion: The impugned demand was set aside on the basis that the disputed materials were waste arising in the manufacturing process and not dutiable by-products.
Ratio Decidendi: Products incidentally arising during a refining process, when they are merely waste removed in the course of manufacture and not intended manufactured goods, are to be treated as waste rather than excisable by-products for the purpose of exemption notifications.
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