Marketability of soapy waste: low-fat residue from vegetable oil manufacture was not soap stock and could not attract duty.

Soapy water or waste with less than 5% fatty matter arising in vegetable oil manufacture could not be equated with soap stock, because soap stock under the relevant standard required at least 20% total fatty matter. The record showed that soap stock could emerge only after a further alternate process, and there was no evidence that the entire quantity of soapy water was marketable as such. The valuation based on an invoice for soap stock containing 33.16% fatty matter was therefore inapposite. On that footing, the material was not liable to duty as soap stock, and the proposed demand, penalty and interest were unsustainable.

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Issues: Whether the soapy water/waste with less than 5% fatty matter, arising in the manufacture of vegetable oil, was a marketable commodity liable to duty as soap stock.

Analysis: The record showed that the appellant's process first yielded soapy water/waste with less than 5% fatty substance, and only on a further alternate process could soap stock emerge. The Commissioner had treated the entire quantity of soapy water as soap stock and valued it by reference to an invoice relating to soap stock containing 33.16% fatty matter. The Indian Standard specification required soap stock to have a minimum of 20% total fatty matter. On that basis, the soapy water in question could not be equated with soap stock and there was no evidence that the entire quantity of soapy water was marketable. The finding that soap stock had been manufactured during the relevant period was also unsupported by data.

Conclusion: The soapy water with less than 5% fatty matter was not a marketable commodity and could not be subjected to duty as soap stock. The demand, penalty, and interest were unsustainable, and the assessee succeeded.

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