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Issues: (i) Whether the benefit of Notification No. 115/75 was available to the assessee in respect of refined edible oil despite part of the raw rice bran oil being procured from outside the factory instead of being wholly extracted in-house; and (ii) whether duty could be demanded on the by-products arising during the refining process, namely fatty acid, gums, waxes, soap stock and acid oil.
Issue (i): Whether the benefit of Notification No. 115/75 was available to the assessee in respect of refined edible oil despite part of the raw rice bran oil being procured from outside the factory instead of being wholly extracted in-house.
Analysis: The notification exempted goods manufactured in factories covered by the specified industries and did not impose any condition that 100% extraction of the raw rice bran oil must be carried out within the assessee's factory. The assessee's factory was an oil mill and solvent extraction industry, and the exemption could not be denied by reading into the notification a requirement that the entire raw material must be self-produced. The subsequent amendment by Notification No. 39/03-C.E. withdrew the exemption for refined edible oil only from 8-5-2003.
Conclusion: The benefit of Notification No. 115/75 was available to the assessee for refined edible oil up to 7-5-2003, and duty became payable only from 8-5-2003.
Issue (ii): Whether duty could be demanded on the by-products arising during the refining process, namely fatty acid, gums, waxes, soap stock and acid oil.
Analysis: Notification No. 115/75 applied to all goods manufactured in the factory falling within the covered industrial category, and the amendment Notification No. 39/03-C.E. did not withdraw exemption in respect of these by-products. As the goods arose in the course of manufacture in the assessee's factory, exemption could not be denied for the period in dispute.
Conclusion: Duty demand on the by-products was not sustainable.
Final Conclusion: The duty demand and penalty were set aside, and the assessee was granted the consequential benefit available in law.
Ratio Decidendi: An exemption notification cannot be curtailed by adding a condition not expressed in its text, and exemption must be granted to goods covered by the notification until it is expressly withdrawn or amended.
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