Hydrogenation of already processed vegetable oil did not change its character, so the processed oil exemption remained available.

Vegetable non-essential oil that had undergone alkali treatment and bleaching remained "processed oil" after subsequent hydrogenation into hardened technical oil. The further hardening process did not, by itself, change the essential identity of the oil or take it outside the scope of the notification covering processed oil. The exemption under Notification No. 33/63, as amended, therefore continued to apply, and denial of the benefit was unsustainable.

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Issues: Whether vegetable non-essential oil, after alkali treatment, bleaching and subsequent hydrogenation into hardened technical oil, remained "processed oil" eligible for exemption under Notification No. 33/63 as amended.

Analysis: The oil had already undergone processes covered by the notification's explanation, namely treatment with alkali, bleaching and deodorization-type processing. Hydrogenation was only a further process of hardening and did not, by itself, alter the essential character of the oil so as to take it outside the scope of "processed oil". The settled position from the Supreme Court authorities relied upon was that hydrogenation does not necessarily convert oil into a different commodity and, unless the later process reverses the earlier processing or changes the commodity beyond recognition, the oil retains its character as oil for tariff and exemption purposes.

Conclusion: The hardened technical oil continued to qualify as processed oil and the exemption remained available; the disallowance of the notification benefit was not sustainable.

Final Conclusion: The appeal succeeded and the assessee retained the benefit of the exemption in respect of the oil used in soap manufacture.

Ratio Decidendi: A further process of hydrogenation does not, without more, deprive already processed vegetable oil of its character as processed oil where the notification covers the earlier processing and the essential identity of the oil remains unchanged.

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