2026 (2) TMI 561 - AT - Central Excise

Excise liability on oil refining residues questioned; tribunal applies mere-saleability doctrine and allows exemption from duty.

The dispute concerns whether residues from sunflower oil refining (mud, soap stock, gums, wax, fatty acids, spent earth) qualify as dutiable goods under ... By-product versus waste - Mere saleability doctrine - classification under Heading 1522 - liability to Central Excise duty on residues from oil refining - precedential effect of Tribunal and Supreme Court decisions - Whether the appellant M/s Priyanka Refineries Private Ltd., Unit II is liable to pay excise duty on sunflower mud, soap stock, gums, wax, fatty acids, spent earth and similar residues which arise in the process of refining of crude sunflower oil into refined oil. - HELD THAT:- The appellant refines crude sunflower oil and produces refined oils and in the process these products emerge. The case of the Department is that the appellant is liable to pay on excise duty of these products fall under Central Excise Tariff heading 1522 00 20/90 of the Central Excise Tariff. We find that in the appellant’s own case, a Co-ordinate of this Tribunal has, in the case of Commissioner Vs Priyanka Refineries Ltd.[2009 (5) TMI 419 - CESTAT, BANGALORE], held that mere saleability of the waste product does not make it a manufacture product and therefore no Central Excise Duty was payable on the same. This decision was affirmed by the Supreme Court by dismissing the civil appeal filed by the Revenue in [2010 (1) TMI 1167 - SC ORDER]. In another case of appellants Priyanka Refineries Pvt Ltd., Unit-II Vs CCE, Hyderabad – II [2019 (7) TMI 249 - CESTAT HYDERABAD] and Appeal No. E/30153/2015 vide Final Order No. A/30331/2025 dated 01.09.2025, Hyderabad Tribunal decided the issue in the favour of the appellant. The instant appeal is squarely covered under the same issue. Therefore, appeals are liable to be allowed. Issues: Whether residues (sunflower mud, soap stock, gums, wax, fatty acids, spent earth and similar residues) generated in the refining of crude sunflower oil are liable to central excise duty by being classifiable under Heading 1522 00 20/90 of the Central Excise Tariff.Analysis: The issue requires determining whether the residues are manufactured goods liable to excise duty or constitute waste/by-products not chargeable to duty. Relevant legal framework includes the classification under the Central Excise Tariff (including Heading 1522 00 20/90 and Chapter 15) and the exemption at Sl. No. 9 of Notification No. 12/2012-CE dated 17.03.2012 for refined sunflower oil. Consideration is given to prior authoritative decisions addressing whether soap stock and similar residues produced in edible oil refining are treated as manufacture or as waste; those decisions rejected conversion of waste into a manufactured product solely on the basis of saleability and were affirmed on finality grounds. The present matter is factually and legally covered by those prior determinations which addressed identical questions of classification and liability.Conclusion: The residues arising in the refining process are not chargeable to central excise duty under the asserted tariff classification; the appeals are allowed and impugned orders are set aside in favour of the assessee.Ratio Decidendi: Mere saleability of a residue does not convert waste into a manufactured product subject to excise; classification for duty cannot be based solely on the fact that a residue fetches a price.