Gujarat High Court
Navasari Oil, Prodoucts Ltd. vs The Superintendent Of Central Excise ... on 1 January, 1800
Equivalent citations: 1980(6)ELT435(GUJ)
JUDGMENT S.H. Sheth, J.
1. The petitioner is a company which manufactures at Navasari Fatty acids which are consumed by textile industry. On 2nd February, 1953, teh petitioner obtained a licence under teh Central Excises and Salt Act, 1944. That licnce was renewed up to 31st Decmber, 1979. It ws a licnece under which the petitioner was authorized to obtain without payment of duty leviable thereon "vegetable product" to be paid by them in the manufacutre of stearic cacit. In 1968 the petitioenr obtained a licence under Central Excies and Salt Act, 1944, to manufacrure super-hardened oil. Both these licences were renewed from year to year and had been in force when this petition was filed. The super-hardened oil which the petitoiner has been kanufacturing was not subject to excise duty. It is indeed a "vegetable prroduct". Entry 13 in teh First Schedule to the Centrla Excises and Slat Act, 1944, subjects "vegetable product" to exccise duty. However, there was an exemption notification issued by the Central Government under which vegetable product was exempted from payment of excise duty which was otherwise leviable thereon if, the Collector of Central Excise was satisfied that the vegetable product was intended for use
(a) in the manufacture of soaps including insollable soaps;
(b) in the manufacture of fatty acid;
(c) in the manufacture of greases, lubricants and textiles sizing agents;
(d) as a protective agent in the manufacture of tin plants.
The exemption granted under this notification was available to the petitioner becasue the petitioner had been using the vegetable produt in the manufacture of fatty acids. However, that notification was later withdrawn and "vegetable product" within the meaning of entry 13 in the first Schedule in its entirely was rendered subject to payment of excise duty.
2. The Central Excsie authoritis, therefore, demanded of the petitoiner excise duty on super-harened oil under they 13 in the First Schedule. The petitioner contendd that duty on super- hardened oil was not leviable under ntyr 13 in teh First Schedule and that it would be leviable under the resiuduary entry int he First Schedule entry 68. it appearrs that the Central Excise authorities did not accpet the contentio raised by the petitioner.
3. The petitioner has, therefore, filed this petition. The quesiton which arises for our consideration in this petition is whether super hardened oil porduced or manufacturer by the petitioner is subject to the payment of excise duty either under entry 13 or under entry 68 in the First Schedule to the Central Excises and Salt Act, 1944. Entry 13 in the First Schedule reads thus :
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Item Description of Goods Rate of Duty No.
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(1) (2) (3)
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13. Vegetable product -
"Vegetable product" means any vegetable oil or fat which, whether but itself or in admixture with any other substance, has by hydrogenation orr by any other processes Ten per cent been hardened for human consumption. ad valorem.
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4. The definitoin of the expression "vegetable product" given below entry 13 in the First Schedule makes it clear beyond any doubt that it contmeplates vegetable prodcut which is fit for human consumption. It does not embrace within its sweep any other vgetable products. The petitoenr has produced before us certificates from two scientific laboratoreis to show that super- hardened oil which is produced or maanufactued isn ot fit for human consumption. The certificate issued by Central Food Technological Research Institute, Mysore, on 27th February, 1976 shows that no fat with amelting point above 370 C can be used for edible purposes. It further states that the melting point of the fat of super-hardened oil which the petitoner has been producing is abnormally high. The seonc deritifact hwich he has p[roduced is from State of Public Health Laboraotry, Baroda, dated 25th March, 1976. It states that the super-hardened oils produced by the petitioner are not fit for human consumption. There are two types of super-hardened oils which the petitoer prodcues one is ground-nut oil and another is palm oil. The super-hardened ground-nut oil porduced by the petitoner, the certificatate shows, has a melting point at 61.50 C while the super-hardened palm oil which the petitioenr has ben producting has melting point at 590C. These two certificates satisfactorily establ;ish the contention rasied on behalf of the petitioner that teh super-hardened ground-nut oil and the super-hardened palm oil which it has been producing are not fit for human consumption and cannot be sued for edible puropses becaue thier meling points are abnormally high. it is clar, therefore, that the super-hardened oils which the petitioner, has been producing are not covers by entry 13 in the First Schedule.
5. It may be stated that on behalf of the Central Excise authorities and the Union of India, no affidavit in reply has been filed controverting the movements made bby the petitioner and the certificates produced by it. We may also state taht both these certifiactes are from Government Laboratories. On behal of the petitioner, Mr. Patel has also brought to our notice a departmental clarification which states that vegetable products which are having a melting point above 43P0C are not assessable under Tariff Item 13 as it is extra-hardened and unfit for human consumption. We see no reason to discard this evidence. No other specific entry has been ointd out to us to show that duty will be leviable thereunder on super-hardened oils produced by the petitioenr. Obviously, therefore, it is the residuary entry - entry 68 - whcih would be attracted in the instant case. Entry 68 subjects "all other goods, not elsewhere specified, manufactured in a factory...." to excise duty. There are three exceptions to this Entry which have been specified below it. It is not the petitioner's case that super handened oil which it has been producing falls under any of the three exceptions to th ersiduary entry - entry 68. Therefore, in our opinion, duty which is leviable on the super-hardened groundnut and palm, oils which the petitoienr has been producing are subject to payment of excise duty under entry on in the First Shchdule in the Centrla Exicses and Salt Act, 1944.
6. In the result, the petition succeeds. it is declared that the super-hardened groundnut and palm oils which the petitioner has been producing are chargeable to excise duty under entry 68 in the First Schedule to the Central Excsies and Salt Act, 1944. A wirt of mandamus shall isssue restraining the respondents from levying and collecting excise duty upon the super-hardened groundnut and palm ols prodcued by the petitioner except under Entry 68 in the First Schedule to the sait Act. The respondents are further directed to refund to thepetitoner all excess amounts paid by it to the respondetns in respect of the two products referred to above. The excess amount shall be compuyted after taking into account what the petitioenr padi, since the withdrawal of exemption notification, to the respondents in respect of the aforesaid, two products and what was peyable by it to them under Entry 68 in the First Schedule to the Central Excises and Salt Act, 1944. Such computation shall be made and the excess amount hsall be refunded to the petitioner within three months from today. Whatever Bank Guarantee the petitioner has furnished in prusuances of the interim order made by this Courtr on 26th June, 1978 is cancelled. Rule is made absolute with costs.