TaxTMI 
TaxTMI 
1998 (5) TMI 252
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....the Tribunal's decision in the case of M/s. Kusum Products, Calcutta v. Collector of Central Excise, Calcutta, in which it has been held that Acid Oil was classifiable under T.I. 12 and not under T.I. 68. It was also his submission that this decision in the case of Kusum Products (sic), reported in 1993 (68) E.L.T. 636 (sic) has been followed in other cases also including those reported in 1985 (19) E.L.T. 479 and 1987 (30) E.L.T. 955. In response to a query from the Bench the learned Counsel further stated that in authoritative book "Bailey's Industrial Oil and Fat Products" also Acid Oil is recognised as Oil and the Tribunal has also taken note of the manufacturing process and recorded in its order in the case of Kusum Products and on tha....
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....Oil shows that it is not produced from a plant or plant organ or a plant part. It is generated as a result of chemical reaction between V.N.E. Oil and some chemicals like Neutralisers and Sulphuric Acid. It is actually nothing but acidified wash and is loosely called Acid Oil due to presence of unreacted Acid and oil otherwise chemically it is neither acid nor oil by itself. 8. Technically also "Fats and Oils are water insoluble Hydrophobic substances of vegetable, land animals, or marine animal origin which consist predominantly of glyceryle-esters of fatty acids, so-called Triglycerides" as per Bailey's `Industrial Oil & Fat Products'. 9. It has also been held by the Hon'ble High Court of Bombay in the case of Bhasir Oil Mills....
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....o other processing after extraction, it ceases to be V.N.E. oil for the purpose of these enactments. 12. Although these observations have been made by the Hon'ble High Courts in the context of the provisions mentioned above, they serve as a useful guide even for our purpose. 13. As can be clearly seen from the flow diagram filed by the learned DR, the Acid Oil is not produced directly from plant or plant organ. On the contrary, it is the result of further processing of extracted oil with the help of neutraliser and acid. Thus, acid oil is far removed from plant/plant organ, the latter being the parent source of V.N.E. Oil and not of the so-called `acid oil'. In fact, acid oil is nothing but a chemical mixture which is a step or ....
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....cid oil by addition of Sulphuric acid. The Soap Stock is thus decomposed to what is known as acid oil. After addition of Sulphuric acid the resultant product is acid oil and water (in which some sodium sulphate is mixed) is let out. 15. This itself shows that the learned DR's submission on the chemical composition and stage of production and manner of production of acid oil is correct and the acid oil is not produced from plant or plant organ but from Soap stock. 16. The Tribunal in the case of Kusum Products has, however, erred in its appreciation of the technical as well as legal aspect of the matter as would be evident from what follows : (17) The definition of oil as given in Bailey's book (Vol. 1, page 1) shows that "Fats a....
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....unt or percentage of Triglycerides which is material for treating a liquid as an oil (and not unreacted fatty acid etc. which can only be considered as impurity). 20. The 'acid oil' on the other hand is a liquid containing a mixture of unreacted or unused materials including unused or unreacted fatty acid, present as remanant in the `wash' generated during the act of neutralisation of V.N.E. Oil and acid treatment of the waste called wash. 21. The so-called Acid Oil is thus not even oil farless V.N.E. Oil as mentioned above. 22. Legally also as we have seen that Bombay and Allahabad High Courts judgments are a good guide to hold that only the oil directly extracted or recovered from a plant or plant organ could be called V....