Crude vegetable oil remains cessable after limited purification, but pre-commencement stock escapes a new cess levy.

Cottonseed and castor oil recovered by crushing oilseeds and then treated only to remove suspended matter remained crude vegetable oil, because such post-extraction processing did not amount to neutralisation, bleaching or deodorisation; the oil was therefore chargeable to cess. By contrast, cess under the new levy could not be imposed on vegetable oil already in stock at the mill at the midnight commencement of the statute, since a fresh impost does not apply retrospectively to goods produced before the levy came into force. The first issue was decided for the department and the second for the assessee.

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Issues: (i) whether cottonseed and castor oil recovered by crushing oilseeds and thereafter treated with caustic soda or steam for separation of suspended matter remained "vegetable oil" chargeable to cess under Section 3(h) of the National Oil Seeds and Vegetable Oil Development Board Act, 1983; and (ii) whether cess was leviable on vegetable oil lying in stock in the mill on the midnight of 31-12-1983/1-1-1984 when the Vegetable Oil Cess Act, 1983 came into force.

Issue (i): whether cottonseed and castor oil recovered by crushing oilseeds and thereafter treated with caustic soda or steam for separation of suspended matter remained "vegetable oil" chargeable to cess under Section 3(h) of the National Oil Seeds and Vegetable Oil Development Board Act, 1983.

Analysis: The expression "vegetable oil" excluded oil which had been subjected to processing subsequent to recovery. The post-extraction treatment in the present case was confined to removal of admixtures and suspended matter, and the oils had not undergone refinement by neutralisation, bleaching or deodorisation. Such treatment did not take the oils outside the category of crude vegetable oil.

Conclusion: Yes. The issue is decided against the assessee and in favour of levy of cess.

Issue (ii): whether cess was leviable on vegetable oil lying in stock in the mill on the midnight of 31-12-1983/1-1-1984 when the Vegetable Oil Cess Act, 1983 came into force.

Analysis: The cess was a new impost brought into force only from the midnight of 31-12-1983/1-1-1984. Oil produced before that date was not previously subject to cess, and the principle governing later collection of an already existing excise incidence did not apply to a fresh levy on pre-existing stock.

Conclusion: No. The issue is decided in favour of the assessee and against levy of cess on the stock already produced before commencement.

Final Conclusion: The first issue was answered in favour of the department, while the second was answered in favour of the assessee, and the appeals were disposed of with consequential relief according to law.

Ratio Decidendi: Oil recovered from oilseeds remains "vegetable oil" for cess purposes if post-extraction treatment is only incidental to removal of impurities and not substantive refinement; but a cess introduced for the first time does not apply to goods already produced before the levy commenced merely because they were cleared later.

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