Customs, Excise and Gold Tribunal - Delhi
Shyam Oilcake Ltd. vs Collector Of Central Excise on 16 November, 1998
Equivalent citations: 1999ECR40(TRI.-DELHI), 1999(105)ELT469(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. In all these appeals, common question of law and facts are involved, hence they are all taken up together for disposal as per law.
2. The question that arises for consideration in these appeals is as to whether the refining process carried out by the appellants on the vegetable oils purchased from the open market will amount to manufacturing process under ithe provisions of Central Excise law and if so whether the new commodity as arising from the same is to be classified under sub-heading 1503.10 of the tariff and as to whether the duty is leviable?
3. The appellants had contended that the refining process undertaken by the appellants does not amount to manufacture under the provisions of Section 2(f) of CE Act. This contention was negatived by the Commissioner (Appeals) on the ground that such process carried out by the appellants is incidental or ancillary to the completion of manufactured product. As regards the classification of the item under Tariff heading 1503.10, the Commissioner has noted that the Tariff heading refers to fixed vegetable oil, other than those of heading 1502, which have undergone subsequent to their extraction any one of the following processes, namely :-
(1) Treatment with alkali or acid (2) Bleaching (3) Deodorisation
4. Noting the contentions of the appellants for their purchasing vegetable oil from the open market including these processes, therefore, it amounts to a process incidental or ancillary to the completion of manufactured product and hence it is excisable and dutiable, as a result the demands raised has been confirmed.
5. It is the contention of the appellants that such process of refining the vegetable oil does not bring into existence any other product as there is no transformation of the product resulting in a different product with different name, character or use. It is also stated that any process which is incidental or ancillary process should result into transformation and bring into existence a new product known differently and marketed differently in the market, to be made excisable and dutiable. In this context, the appellants have relied on several judgment of the Supreme Court wherein an identical issue was examined and it would be held that such process does not amount to manufacture. It is also submitted that further process of hydrogenation after vegetable oil had been refined has also been held to have not resulted into a process of manufacture. In this regard, special reliance has been placed in the judgment rendered in the case of Tungabhadra Industries Ltd. v. The Commercial Tax Officer, judgment rendered by the Supreme Court in AIR 1961 SC 412, which was rendered under the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, wherein a question of raw groundnut oil converted into refined oil was the subject matter to arrive at the conclusion whether it amounted to manufacture and brought into existence a new product. The Hon'ble Supreme Court while appreciating the entire facts of the case noted that a liquid state is not an essential characteristic of a vegetable oil and even if the oil is not liquid, it does not cease to be oil. It held that beyond the process of refining of the oil, the oil is hardened, again by the use of chemical processes. These are rendered now the less "groundnut oil". The Hon'ble Supreme Court held that the fact that in the course of hydrogenation the oil absorbed two atoms of hydrogen and that there was an inter-molecular change in the content of the substances is also not decisive of the matter. It held that there is no use to which groundnut can be put for which the hydrogenated oil could not be used nor is there any use to which the hydrogenated oil could be put for which the raw oil could not' be used. The Court held that the hydrogenated oil still continues to be 'groundnut oil' notwithstanding the processing which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume groundnut oil. In that view of the matter, the Supreme Court held that such process of hydrogenation did not result into a new product.
6. It was argued by the learned Sr. Advocate that the process of hydrogenation is for improving process than refining and when this process itself has been held to be not a process of manufacture, therefore, refining the oil by no means can be held to be a process of manufacture as it merely improves the quality by removing the impurities and the vegetable oil remains the vegetable oil, hence the lower authorities have not appreciated the question in the right perspective under the law laid down from the times of the judgment rendered by the Supreme Court in the case of Tungabhadra Industries Ltd., which has since been followed in number of judgments subsequently. Therefore, it is his contention that the law laid down on the term "manufacturer" in the case of Union of India v. Delhi Cloth and General Mills Co. Ltd. as reported in 1977 (1) E.L.T. J 199, also deals with an issue pertaining to manufacture of vanaspati. In that case also the manufacturers purchased groundnut and til oil from the open market or directly from the manufacturers of such oil. The oils thus purchased are subjected to different processes in order to turn them into Vanaspati. The Hon'ble Supreme Court after a detailed discussion on the aspect pertaining to 'manufacture' upheld the High Courts' view that there is no legal basis for demand for excise duty and also to hold that such processing amounted to manufacture and bringing into existence a new substance known to market. The Supreme Court held that raw oil or the refined oil must be same substance known to the market before it can be subjected to the duty. The learned Advocate again drew attention to the judgment rendered in the case of Prem Ji Haridas & Co. v. Municipal Corpn. of Greater Bombay as reported in 1997 (89) E.L.T. 658, wherein the Bombay High Court held that the conversion of caster oil (Commercial) to caster oil (BP) by a process of filtration, did not amount to manufacturing process and no new product emerged for ex-cisability and durability under Section 2(f) of Central Excise Act, 1944. Attention was also drawn to the judgment under Minimum Wages Act rendered by the Hon'ble Supreme Court in the case of Champaklal H. Thakkar and Ors. v. State of Gujarat and Anr. as reported in AIR 1980 SC 1980 on the term employment in any oil mill while covering this term, the Supreme Court had an occasion to examine as to whether employment in a Vanaspati manufacturing concern was an employment in an oil mill. The learned Advocate submits that this judgment would be held to through light on the term vanaspati machinery and different kinds of machinery and the ratio would apply. Further reference was drawn on a later judgment of the Supreme Court rendered in the case of Collector of Central Excise v. Jayant Oil Mills Put. Ltd. as reported in 1989 (40) E.L.T. 287, wherein the Hon'ble Supreme Court held that oil would remain oil if it retains its essential properties and merely because it had been subjected to certain processes would not convert it into a different substance. Therefore, the Supreme Court held that edible rice bran oil falling under Tariff Item 12 CET would even after extra hardening or the process of hydrogenation will not fall under Tariff Item 68 but will continue to fall under Item 12 for two reasons - firstly the essential properties of the rice bran oil are not changed even after the process of hydrogenation/hardening as there is hardly any distinction between vegetable oil in liquid form and hydrogenated oil which is hardened with a melting point higher than 40°C, and secondly restore to the residuary entry 68 cannot be made when there is a specific entry in Tariff Item 12 for the "goods" in question. The Supreme Court held that the subject goods admittedly produced for industrial purposes and not for human consumption. Therefore, they will not fall under Tariff Item 13. In this regard, the Supreme Court referred to the earlier judgments rendered in the case of Tungabhadra Industries Ltd. v. The Commercial Tax Officer, Champaklal v. State of Gujarat and that of IVP & Vital Oil Pvt. Ltd. v. Collector of Central Excise. The learned Advocate submits that in view of these judgments, the lower authorities still continuing to hold the process of refining the vegetable oil produced from the open market to be a process of manufacture resulting in a new product is in fact to show disrespect to the judgments rendered by the Hon'ble Supreme Court and it amounted to not following the ratio of the Hon'ble Supreme Court.
7. The learned DR reiterated the departmental stand and added that there is a definition made in the Tariff itself and as the tariff entry refers to the processes, therefore, such processes carried out would bring into existence a new commodity.
8. Countering these arguments, the learned Advocate submits that some entries in the tariff could not by itself bring into existence an article as has been held by the Hon'ble Supreme Court in the case of Bhor Industries Ltd. v. Collector of Central Excise as reported in 1989 (40) E.L.T. 280, wherein the Hon'ble Supreme Court has in a categorical terms stated that an article is not liable to excise merely because of its specification in Tariff Schedule unless it is "goods" known to the market. He also pointed out that this view was again reiterated by the Hon'ble Supreme Court in the case of Collector of Central Excise v. Ambalal Sarabhai Enterprises as reported in 1989 (43) E.L.T. 214.
9. On a careful consideration of the matter, we are of the considered opinion that the argument placed by the learned Advocate requires acceptance and the case law is squarely applicable to the facts of the case. We are of the considered opinion that the order passed by the Commissioner namely, Shri Someshwar is totally peremptory. There is non-application of mind and the order is totally contrary to the law laid down by the Hon'ble Supreme Court. The Commissioner has not followed the law laid down by Hon'ble Supreme Court on this point which amounts to judicial indiscipline. It has been emphasised by the Hon'ble Supreme Court time and again that mere mention of an item in a tariff does not mean by itself to bring an article into existence unless the article has specifically passed the test of marketability or the item is marketable, as held in the case of Bhor Industries Ltd. and Ambalal Sarabhai Enterprises. As has been stressed by the Hon'ble Supreme Court in the judgment noted that hydrogenation by itself does not bring into existence a new commodity. The process in the present case is much earlier to hydrogenation and that is a process of refining the vegetable oil purchased from the market. In the DCM case itself, the Hon'ble Supreme Court held that the process of hydrogenation did not amount to manufacture and therefore, even a process earlier to that in making the oil refined would not amount to a process of manufacture, as 'oil' remains 'oil' even after the process and there is no change in name, character or use. The learned Commissioner has totally misapplied the law and has misread the judgment of DCM's case. The learned Commissioner has not even cared to go through the entire provisions of law pertaining to marketability, excisability and dutiability and in this particular case, the issue has been raised again and again before the Hon'ble Supreme Court as in the case of Tungabhadra Industries Ltd. as far back in 1969. It is well settled that the judgment of the Hon'ble Supreme Court is law and is binding on all the authorities. This Bench had an occasion to examine a similar issue in the case of Collector of Central Excise v. Jayant Oil Products (P) Ltd. as reported in 1995 (7) RLT 586, wherein the conversion of castor oil into dehydrated castor oil was held to be not amounting to a process of manufacture and it was held that a new product does not come into existence. In this regard, the judgment rendered by the Hon'ble Supreme Court in the case of Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd. as reported in 1989 (40) E.L.T. 287, CCE v. Jayant Oil Mills as reported in 1993 (67) E.L.T. 986 and that of Tata Oil Mills v. Collector of Central Excise as reported in 1986 (24) E.L.T. 290, was relied.
10. In the case of Collector of Central Excise v. Jayant Oil Mills, as reported in 1993 (67) E.L.T. 986, the Tribunal held that unless it can be shown that the change in the essential properties of the oil inasmuch as that a new commodity has come into existence with a new character, name and vise, it would not be appropriate to take the oil from Item 12 and classify it under the residuary item. It was held that blpwn oil is shown both in the Condensed Chemical Dictionary as well as the Glossary of Chemical Terms to be 'A vegetable oil through which air is passed'. It was held that as a result of partial oxidation, which is only a physical properties viz. the density, viscosity, drying power, which undergo a change. Therefore, it was held that it cannot be said that blown castor oil undergoes such a change in its character and properties that it does not remain a vegetable non-essential oil.
11. In the present case also the Revenue has not produced any evidence technical or commercial/trade parlance to show that the process of refining vegetable oil amounts to a new product and is known even in the market differently and traded differently with a different name, character and different use. In that view of the matter, the impugned orders are totally unsustainable and they are required to be set aside, which we do so by allowing the appeals.
Sd/- Sd/- (S.K. Bhatnagar) (S.L. Peeran) Vice President Member (J) S.K. Bhatnagar, Vice President
With due respects to Hon'ble Member (judicial), my views and orders in the matter are as follows.
12. It is observed that Heading 15.03 reads as follows :-"15.03. Fixed vegetable oils, other than those of heading No. 15.02.
1503.10 - Which have undergone, subsequent to their extraction, any one or more of the following processes, namely :-
(1) Treatment with an alkali or acid.
(2) Bleaching.
(3) Deodorisation.
1503.90-Other."
13. The language of the Heading 1503.10 is significant. It specifically mentions three different processes and indicates that if fixed vegetable oils, other than those of Heading 15.02, are subjected to one or more of these processes, they will be classifiable under this sub-heading. We are, therefore, basically required to see whether in the appellants' case, the product has been obtained by subjecting the specified types of fixed vegetable oils with any one or more of these processes. There is no denial or dispute about the fact that the vegetable oils purchased from the market by the appellants are in the nature of fixed vegetable oils and the fact that the appellants had subjected these goods to one or more aforementioned processes is also not in dispute. Therefore, there is a lot of force in the department's contention that the goods were classifiable under Heading 1503.10.
14. It is noteworthy in this connection that the new tariff utilises many legal fictions and treats many a processes as amounting to manufacture, by giving indication to this effect in a section note, chapter note or in the heading itself. Whereas in case of many chapters, the legal fiction has been incorporated in one of the chapter notes and it has been indicated what shall amount to manufacture or shall be deemed to be manufacture as, for example, in Chapter 30 (chapter note 5) (and many other chapters already noted in various Tribunal's orders). In the present case, the processes amounting to or deemed to be manufacture have been mentioned, instead of chapter notes, in the heading itself. Therefore, in my view, they have to be taken into account for the purpose of determining whether in a particular case, the goods were classifiable under this heading or sub-heading.
15. The appellants have cited a number of judgments of the High Courts and the Hon'ble Supreme Court and the Tribunal itself but, what is important from our point of view is to see as to whether the principles laid down therein or the ratios thereof apply to the case in hand.
16. In this respect, a great emphasis has been laid on the Supreme Court's judgment in the case of Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd. reported in 1989 (40) E.L.T. 287. This judgment was, however, rendered with reference to the old tariff and the dispute was whether the (edible hydrogenated Rice Bran oil) were classifiable under Item 12,13 or 68 of the old tariff. The old tariff, however, did not incorporate any legal fiction and did not refer to any particular process (es) or the product of such specified processes and therefore, in my opinion, the ratio was not applicable.
17. Again, the case of Bhor Industries (supra) has been cited but, here, there is no dispute that the products in question were marketable and therefore, this judgment does not help us and in fact, it has no bearing on the issues before us.
18. The case of Associated Cylinder Industries Ltd. v. CCE reported in 1990 (48) E.L.T. 460 (Tribunal) cited before us distinguishes between removal and clandestine removal and has no bearing on the excisability or the classification issue.
19. Similarly, the Tribunal's order in the case of Collector of Central Excise v. Crescent Chemical Corporation reported in (supra) does not help us. Merely because the processing of lubricating oil was not considered as part of the manufacture, it does not mean that in all cases, the processing would not amount to manufacture. It is common knowledge that a very large number of products available in the market are produced as a result of refining of crude petroleum or processing of petroleum fractions obtained by fractioned distillation or other processes. Heading 15.05 itself covers acid oils produced by refining. Therefore, to say or claim that processing or refining would never constitute manufacture is too much of a generalisation and is not applicable to all cases. What is essential for us is to see whether the process whether called as refining or purification or by any other name results into a product having a distinct name, character and use or identifiable and known as distinct commodity in the market. Again, wherever as a result of legal fiction incorporated in the tariff, a particular process or processes (whether they include refining or purification or not) is deemed to be a process of manufacture and the products thereof have been specifically incorporated in the tariff entry, the legal position flowing therefrom is required to be taken cognizance of.
20. In the present case, the learned Collector has erred only to the extent of observing that the processes were incidental or ancillary to the completion of the process of manufacture; But, perhaps, in so observing, he was guided by the fact that these processes are undertaken after extraction of the fixed vegetable oils. However, what is important is that these processes have been incorporated in the heading itself and products obtained by these applications have been explicitly included in the heading.
21. While a mere entry in a tariff heading may not sufficient to consider an item as an excisable product, the situation arising from incorporation of specific processes in a chapter note or heading itself creates a point of distinction which cannot be overlooked.
22. The example of conversion of castor oil into dehydrated castor oil also, in my opinion, does not help the cause of the appellants. In this case, the process was not held to be a process of manufacture but again, each case has to be dealt with in its own merits and in the present case, the aspects discussed above were relevant and constitute points of distinction with the above case both from factual or legal point of view
23. In view of the above discussion, I consider that the department was justified in considering the products in question as excisable goods classifiable under Heading 1503.10 and therefore, the Collector was right in upholding the A.C.'s order regarding classification and I see no reason to interfere with the order.
24. I would also like to mention that in any eventuality, in my opinion, the Collector's order does not amount to indiscipline of any sort. There is nothing in his order which would go to indicate that he has shown contumacious disregard of any judgment or disrespect to any higher appellate authority or judicial authority. It is our daily experience that many officers including Members differ on interpretation or the applicability or otherwise of the ratio of a particular judgment of the Tribunal, High Courts or Hon'ble Supreme Court to the facts of a given case and sometimes, even a relevant case is either not brought to the notice or escapes notice but, while in such cases, an error could possible creep in, that by itself does not amount to an act of indiscipline. I, therefore, dis-associate with the observations made in paragraph 9 of Hon'ble Member (J)'s order above.
25. In view of the above discussion, I uphold the order of the Collector and reject the appeals.
Sd/-
(S.K. Bhatnagar) Vice President POINT OF DIFFERENCE
26. In view of difference of opinion between Hon'ble Member (Judicial) and the Vice President, the matter is submitted to Hon'ble President for reference to a Third Member on the following point :-
"Whether in view of the facts and circumstances of the case, the appeals are required to be allowed as held by Hon'ble Member (Judicial) or the appeals are required to be rejected in view of observations of the Vice President."
Sd/- Sd/-
(S.L. Peeran) (S.K. Bhatnagar)
Member (J) Vice President
K. Sankararaman, Member (T), agreeing with Vice President
27. This difference of opinion matter was argued before me by Shri Ravinder Narain learned Senior Advocate for the appellants and by Shri H.K. Jain learned Senior Departmental Representative. I am recording below my order as the third Member.
28. Learned Senior Counsel submitted that the appellants herein purchase duty paid in respect of Vegetable Oil and refine the same. The department has classified the product under sub-heading 1503.10 on the ground that this heading takes in oils that have undergone refining process. He contended that the view of the departmental authorities which has been shared by the Vice President in his order that the various decisions cited in support of the appeals about oils subjected to processes being treated as oils only not liable to duty are not relevant in the present appeals in view of the new Tariff and the amended provisions of Section 2(f) of Central Excise Act, 1944 as to what constitutes manufacture. Such a view is not correct, he contended since, by the amended provisions of Section 2(f) of the Act, the term manufacture includes only a process which is specified in relation to any goods in the Section or Chapter notes of the Central Excise Tariff Schedule as amounting to manufacture.
29. In the present case, the process of refining undergone by the oils is not specified as amounting to manufacture in the relevant Section or Chapter Notes but mentioned in the Tariff sub-heading. The mention of the processes in the Tariff Heading/sub-heading is not the same as specification in the Section or Chapter Note of the Tariff Schedule which is the requirement as per the definition under Section 2(f). Mere mention in the Tariff does not make an item excisable. He cited the following decisions of the Supreme Court in support of his plea about manufacture not being involved when certain processes are undergone or non-excisability in certain situations.
(1) Moti Laminates Pvt. Ltd. v. Collector of Central Excise -1995 (76) E.L.T. 241. (2) Bhor Industries Ltd. v. Collector of Central Excise -1989 (41) E.L.T. 280. (3) Collector of Central Excise v. Ambalal Sarabhai Enterprises - 1989 (43) E.L.T. 214 (S.C.) (4) Union of India v. Delhi Cloth & General Mills Ltd. - 1977 (1) E.L.T. (J 199). (5) Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool - AIR 1961 Supreme Court 412. (6) Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd. -1989 (40) E.L.T. 287.
30. In addition he cited a few Tribunal decisions also wherein it had been held that conversion of Castor Oil into blown castor oil by passing air through it or to dehydrated castor oil does not convert the castor oil into a new product or that extra hardened rice bran oil, prepared by super hydrogenation of rice bran oil continues to remain a vegetable oil classifiable under item 12 of the Central Excise Tariff (old) and not items 13 or 68. These decisions were in Collector of Central Excise v. Jayant Oil Mills -1993 (67) E.L.T. 986.
Collector of Central Excise, Bombay HI v. Jayant Oil Products (P) Ltd. -1995 (7) RLT 586.
Tata Oil Mills Co. Ltd. v. Collector of Central Excise, Madras - 1986 (24) E.L.T. 290.
Again in Collector of Central Excise v. Crescent Chemical Corporation -1990 (48) E.L.T. 458 the Tribunal held that processing of lubricating oil by which its usability may be reduced or enhanced would not attract dutiability as long as lubricating oil retains its character as lubricating oil and does not become a different excisable commodity. Counsel pointed out that under the old Tariff, the decisions have been that the process of refining vegetable oils did not amount to manufacture and involved no excise duty. The only change brought about subsequent to these judgments, besides the introduction of the new Tariff, is the extended definition of manufacture under Section 2(f). That does not affect the disposal of the subject appeals as there is no reference to any processes in respect of vegetable oils as amounting to manufacture in terms of any Section or Chapter Note.
31. Learned Counsel then pointed out that the crucial question involved are whether manufacture is involved and whether they are goods. He referred to the Supreme Court decision in Moti Laminates Pvt. Ltd. (supjra). In paragraph 7 of the said judgment he stated, the Court had observed as follows:
"The duty of excise being on production and manufacture which means bringing out a new commodity, it is implicit that such goods must be useable moveable saleable and marketable. The duty is on manufacture or but the production or manufacture is carried on for taking such goods to the market for sale. The obvious rationale for levying excise duty linking it with production or manufacture is that the goods so produced must be a distinct commodity known as such in common parlance or to the commercial community for purposes of bringing and selling. In the Bhor Industries Ltd. case, it was laid down that simply because a certain article falls within the schedule it would not be dutiable under Excise Law if the said article is not goods known to the market. Accordingly, contended the learned Senior Counsel, the mention of the processes in the Tariff Heading does not make the item concerned excisable goods. The process has to be specified in the Section Note or Chapter Note as amounting to manufacture as laid down in Section 2(f) of the Act. He pleaded that the order of Judicial Member may be agreed to.
32. Shri H.K. Jain, learned Senior Departmental Representative stated in reply that Section Notes and Chapter Notes are meant to interpret the Tariff Headings. Where the Tariff Heading itself refers to the processes there is no need to look for a Section Note or Chapter Note. He referred to the decisions of the High Court of Calcutta in Union of India v. Bata India Ltd. reported in 1993 (68) E.L.T. 756 wherein it was held that where the goods find place as items in the Tariff Schedule the presumption shall be that the goods are excisable goods and that they can cease to be excisable goods if they have no market. Shri Jain stated that the S.L.P. filed by Bata against this judgment was dismissed by the Supreme Court. He then contended that the Supreme Court judgment in Moti Laminates, Bhor Industries and Ambalal Sarabhai cases do not actually support the appellants as the items in question in those cases were held to be not marketable; such is not the case here as the refined oils, the goods in the present appeals are marketable and marketed. Appellants have not denied this. He also referred to the Tribunal decision in Garware Plastics and Polyester Ltd. v. Collector -1993 (67) E.L.T. 670 wherein it was held that once the legislature specifically covers an item and makes that item dutiable the process by which the said product is brought into existence amounts to manufacture. Giving a rejoinder to the arguments of Shri Jain, learned JDR, Shri Ravinder Narain learned Senior Counsel stated that Section Note or Chapter Note are showing the scope of the Tariff Heading/sub-headings covered by them. The ingredient of charging section is manufacture. The Supreme Court decisions in Moti Laminates and Bhor Industries have laid down that only when goods answer the test of marketability they are to be taken as having been manufactured and dutiability will arise. Mere figuring in the Tariff Schedule is not enough without the marketability criterion being answered. Manufacture and goods are on the same pedestal. The extended definition of manufacture can only be on the basis of Chapter Note or Section Note if any process is specified therein as amounting to manufacture and not otherwise. That is not satisfied here. He reiterated his plea that the order of the Judicial Member may be concurred with.
33. I have considered the submissions. I have gone through the two orders before me. I have perused the judgments and decisions cited. The issue for decision is whether Tariff sub-heading 1503.10 covering (Fixed vegetable oils, other than those of Heading No.15.02) "which have undergone subsequent to their extraction any one or more of the following processes, namely :
(1) Treatment with an alkali or acid.
(2) Bleaching.
(3) Deodorisation".
will justify the levy of duty under that sub-heading on Fixed vegetable oils subjected to refining. The resistance to the levy of duty under the said subheading from the appellants is on the ground that for any process in relation to any goods to be held as amounting to manufacture for excisability the requirement is specification of such process in the relevant Section Note or Chapter Note as amounting to manufacture and the mention of such processes in the Tariff Heading itself will not do. It is urged that mere mention of the process in the Tariff sub-heading or Heading, like specification of an item in the Tariff is not conclusive of its excisability. The crucial criterion for that purpose will be marketability. This is the law laid down by the Supreme Court in the decisions cited. To appreciate the validity of the contention and to decide whether these decisions are applicable to the present appeals will require, apart from an evaluation of the submissions made by Shri Jain, learned Senior Departmental Representative in that regard, appreciation of the fact situation in those cases. Thus, in the Moti Laminates case, the department wanted to levy duty on Resol under Tariff Item 15A (old Tariff) which was produced by them for captive consumption. The said product was obtained as an aqueous solution and claimed by Moti Laminates as unstable, having short life and not marketable in the form obtained in intermediate stage in a continues process. Explanation II under Tariff Item ISA specifically referred to Resol as being among the items covered. The Tribunal had held that Resol is the chemical name of the product arising in the course of manufacture of Phenol formaldehyde resin as a fluid and soluble, containing much water. In standard reference Books (Glossary of Chemical Terms and Condensed Chemical Dictionary) the formation of Phenol formaldehyde resin is said to consist of three stages. The first (A stage) in an alcohol soluble liquid which is called Resol. It was noted by the Supreme Court that Resol was thus a solution which could be retained only on addition of some stabiliser or retarder but the appellants (Moti Laminates) used it for manufacturing Laminated sheets in semi-finished stage without any processing or adding any stabiliser or retarder. It could not be used as found by the Tribunal unless some stabiliser was added to it. It could survive only if regulated and controlled temperature was maintained. Otherwise it would get converted into a jelly, incapable of any use. It was in view of its short life and the fact that it could not be used as such without any further processing or application of heat or pressure that it was held by the Supreme Court that it could not be considered as goods on which any excise duty could be levied. It was observed that the plea on behalf of the department that merely because the intermediate product was resol and it was one of the items mentioned under item ISA it was excisable to duty ignored the basic and primary test for excisability of duty. It was by applying the same test of marketability that the Court held in the Bhor Industries and Ambalal Sarabhai cases that the disputed items in question were not excisable. Thus, in the former case, crude PVC films arising as intermediate product in the course of manufacture of leather cloth, jute matting and PVC tapes were held to be non-excisable. In the latter case, starch hydrolysate produced for captive consumption were held to be not marketable and hence not excisable to duty. In the present appeal, there is no dispute about the marketability of the refined oils. The test of marketability as a factor for deciding excisability is satisfied. This was the plea of Shri Jain, learned Senior Departmental Representative and it has to be upheld. That brings me to the other contention raised on behalf of the appellants that the process of refining not being specified in Section 2(f) of the Central Excise Act as amounting to manufacture in the case of vegetable oils, refined oil is not excisable. The mentioning of the processes while specifying the goods under Tariff sub-heading 1503.10 has been dismissed as of no import in the absence of a suitable Chapter Note or Section Note specifying such a process as amounting to manufacture. Here also, the submission of Shri Jain merits acceptance. These notes are to be applied for understanding the scope of a Tariff Heading or sub-heading, if there is any doubt about such entries but the absence of a Note in the Section or Chapter does not invalidate an entry in the Tariff which has to be applied as worded. The Tariff entry does not progress into duty only if the material sought to be covered thereunder fails the test of marketability which is not the case here. The scope and purpose of Section Note and Chapter Note can be understood by considering a few selected notes. Thus, in Chapter 33 covering inter aha perfumery, cosmetic preparations etc. Chapter Note 4 specifies that in relation to products of Headings 33.03,33.04 and 33.05 conversion of powder into tablets, labelling or relabellings of containers intended for consumers, repacking from bulk packs to retail packs shall be construed as manufacture. Such a note would be necessary where the intention of the Government is to levy duty on the products in question subjected to specified processes. Without the Chapter Note, levy of duty on, say, products repacked from bulk would not be permissible. To provide for such levy the Chapter Notes are necessary. In the present case, the specific wordings of the particular Heading and sub-heading 1503.10 and 1503.90 cover respectively. Vegetable oils, which have undergone treatment with an alkali or acid, Bleaching and deodorisation on the one hand and "other" (covering vegetable oils not subjected to such processes) on the other. These two products are different products, the former being derived from the latter. The decisions that refined oil or even hydrogenated oil are not different from oils and continue to be such oils have been taken in the context of provisions which provided for only oils with no separate provision for oils not subjected to processing and oils subjected to processing.
34. The difference in the wording of entries in the different statutes have their effect on the question whether processed oil is different from the unprocessed oil. Thus, in Tungabhadra Industries case (AIR 1961 Supreme Court 412) it was held that Hydrogenated oil continues to be groundnut oil despite the chemical process for hardening it, by the oil absorbing hydrogen resulting in inter molecular change but in the Central Excise context the groundnut oil attracted classification under Tariff item 12 and Hydrogenated Groundnut oil fell under item 13 as vegetable product. These were different products falling under different items of the Tariff. The validity of classification of vegetable product under Tariff item 13 was not called into question on the ground that the same continued to be the same as the unhydrogenated constituent oils. In Union of India v. Delhi Cloth and General Mills Co. Ltd. 1977 E.L.T. J199 also there was no challenge to the classification and levy of duty on vegetable product (vanaspati) obtained by hydrogenation of vegetable non-essential oil. The dispute was on demand of duty on Refined oil. The Court held in paragraph 13 at page J204 of the report that raw oil purchased by the respondent therein did not become at any stage refined oil as known to the consumers and the commercial community. This is not the issue in the present case where appellants are admittedly manufacturing and selling Refined oil.
35. For the foregoing reasons, I am of the view that the findings reached by the Judicial Member have been arrived at without taking note of the difference between the Excise Tariff at the material time and the provisions in the enactments in question which were the subject matter of the decisions cited in support of the appeal. With respect, I record my disagreement with his view. Consequently the view expressed by the Vice President gets my approval. I order accordingly.
36. The papers may be sent to the Original Bench for passing the final order in accordance with the majority view.
Sd/-
(K. Sankararaman) Member (T) FINAL ORDER
37. In view of the majority opinion, the appeals are rejected.