1989 (4) TMI 198 - AT - Central Excise

Interpretation of Central Excise Notification No. 33/63 on Vegetable Tallow Classification

The Tribunal upheld the Appellate Collector's decision in a case involving the interpretation of Central Excise Notification No. 33/63. The dispute ... Vegetable non-essential oils Issues:Interpretation of Central Excise Notification No. 33/63 regarding duty exemption for vegetable non-essential (VNE) oil used in the manufacture of vegetable tallow.Classification of vegetable tallow as a finished excisable product and its impact on duty exemption eligibility for VNE oils.Consideration of specified processes under the notification for defining 'processed' VNE oil.Analysis:The case involved a show cause notice issued under Section 36(2) of the Central Excises and Salt Act, 1944 by the Central Government. The notice aimed to challenge an order passed by the Appellate Collector of Central Excise, Bombay, seeking to deny duty exemption under Central Excise Notification No. 33/63 for vegetable non-essential (VNE) oil used in the manufacture of vegetable tallow. The dispute arose as the vegetable tallow was cleared at nil rate of duty under a different notification, leading to a demand for duty on the processed VNE oil by the Assistant Collector.The Appellate Collector accepted the contention of the party, Hindustan Lever, that the vegetable tallow was sent to their own factory for further processing into soaps, arguing that the tallow should be considered an intermediate product rather than a finished product. This argument was crucial in determining the eligibility of VNE oils for duty exemption under Notification No. 33/63.The Central Government's position was that once the vegetable tallow, classified as a finished excisable product, was cleared after availing duty exemption, the VNE oils used in its manufacture would not be eligible for the exemption under the proviso to Notification No. 33/63. The Government contended that the subsequent manufacturing of soap by the same manufacturer did not alter the status of the vegetable tallow as a finished product.Hindustan Lever denied the allegations and contested the notice, leading to the transfer of the proceedings to the Tribunal for disposal as an appeal. The Tribunal, after hearing arguments from both sides, focused on the interpretation of the specified processes under the notification to define 'processed' VNE oil. The Tribunal rejected the show cause notice issued by the Central Government, upholding the Appellate Collector's order based on previous decisions in similar cases.In conclusion, the Tribunal's decision in this case reaffirmed the interpretation of Central Excise Notification No. 33/63 regarding duty exemption for VNE oils used in the manufacture of vegetable tallow. The classification of vegetable tallow as a finished excisable product and the consideration of specified processes under the notification were central to determining the eligibility for duty exemption, ultimately leading to the rejection of the appeal.