1996 (5) TMI 264 - AT - Central Excise

Credit for Oil Use Limited to Hydrogenation Stage: Tribunal Upholds Interpretation

The Tribunal concluded that under Notification No. 45/89, money credit for minor oil used in manufacturing vegetable products is restricted to the ... Money credit Scheme Issues Involved:1. Grant of money credit in respect of minor oil used in the manufacture of vegetable products under Rule 57K read with Notification No. 45/89.2. Interpretation of Notification No. 45/89 in the context of Rule 57K and the preceding exemption Notification No. 115/86-C.E.3. Applicability of Rule 57M in the context of losses during hydrogenation.Issue-wise Detailed Analysis:1. Grant of Money Credit:The primary issue in the appeals concerns the grant of money credit for minor oil used in the manufacture of vegetable products, specifically vanaspati, under Rule 57K read with Notification No. 45/89. The appellants sought the benefit for the entire quantum of raw oil taken into processing, while the authorities restricted the benefit to the quantum of minor oil that emerged after processing and was used for hydrogenation.2. Interpretation of Notification No. 45/89:The learned Advocate for the appellants argued that the Tribunal's decision was guided by the earlier exemption Notification No. 115/86-C.E., which should not have been the case. Instead, the rule itself should have been the guiding factor. The Tribunal, however, upheld the interpretation that the notification's intention was to grant exemption only for the weight of minor oils present in the mixture of oils immediately before hydrogenation. This interpretation was consistent with the preceding exemption notification and the wording of Notification No. 45/89, which specified that credit is to be given only for the quantity of oil subjected to hydrogenation.3. Applicability of Rule 57M:The appellants contended that Rule 57M should be considered if there is a loss in hydrogenation. However, the Tribunal clarified that Rule 57M could only be invoked if there is a loss after hydrogenation, not for the quantity of raw oil taken for processing before hydrogenation. The notification did not allow money credit for the quantity of raw oil taken for processing, and thus, Rule 57M was not applicable in this context.Tribunal's Conclusion:The Tribunal concluded that Notification No. 45/89, when read in conjunction with the preceding exemption Notification No. 115/86-C.E., clearly indicated the government's intention to grant credit only for the quantity of oil subjected to hydrogenation. The Tribunal dismissed the appeals, upholding the lower authority's order and reaffirming that the credit should be restricted to the quantity of oil that reached the stage of hydrogenation.Significant Phrases:- 'The percentage of cotton seed oil or specified minor oils used in the manufacture of vegetable product shall be calculated with reference to the weight of such oils and the total weight of the mixture of oils immediately before such mixture is subject to the process of hydrogenation for conversion into the said vegetable product.'- 'Credit shall be taken only in respect of quantity of oil or fat, as the case may be, subjected to hydrogenation for the manufacture of vanaspati and bakery shortening.'- 'The notification issued under Rule 57K by incorporation of various conditions for the purpose of grant of concession can be taken to machinery provisions.'In summary, the Tribunal's judgment emphasized a strict interpretation of Notification No. 45/89, limiting the grant of money credit to the quantity of oil subjected to hydrogenation, consistent with the government's established intention and prior exemption notifications.