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(a) Detailed process of manufacturing involved in production of lecithin powder out of liquid lecithin which was elaborated in an earlier proceedings original order of the jurisdictional Deputy Commissioner dated 31.01.2006;
(b) Test report after chemical analysis of the impugned goods done earlier read with Indian Standards specification for soya crude oil;
(c) Independent examination of manufacturing process of lecithin powder and the nature of emerging by-product namely soya crude oil.

6. In the appeal, the Revenue contended that the product emerging is not of edible grade as admitted by the respondent. The lecithin liquid which is the main raw material in the manufacturing process is itself a fraction of soyabean oil. The lecithin liquid with the help of Acetone was put to further process wherein the impugned goods soya oil arises as a by-product. The respondent are clearing the impugned goods with much lower price than sold by another nearby unit M/s Bergwerff Organic India Pvt. Limited and as such it is apparent that the product cannot be crude oil but actually by-product of lecithin.

7. In the Cross-Objection filed, the respondent strongly contended that there is no merit in the present appeal. The matter of classification has been settled in their favour in 2006 itself after detailed examined and chemical testing. There is no new fact emerging and the respondents are all along clearing the goods as soya crude oil from the date of inception classifying the same under CTH 15071000. Regarding the difference in price when compared to other unit they have stated that M/s Bergwerff Organic are manufacturing solvent extracted soyabean oil out of soyabean seeds whereas the respondent is manufacturing crude soyabean oil out of lecithin liquid. There is no comparison of the emerging products as the raw material and process are different, therefore, the pricing will be different.

Crude oil is generated during the course of manufacture of lecithin reveals that Commercial Liquid Lecithin is a mixture of Phospholipids and crude oil, to separate out lecithin powder & crude oil, liquid lecithin is treated with acetone with stirring and then settled for some time. Top layer is a mixture of crude oil and acetone and bottom layer is rich in lecithin powder. Top layer so obtained is put to suction under vacuum. Again fresh acetone is added and distilled. This process is carried out for 5 -6 times with stirring. Semi-liquid material is obtained which is a mixture of acetone and crude oil and is subjected to filtration and then decanted. It is then distilled to separate solvent (Acetone) and soya crude oil which still contains some quantity of acetone. Crude oil containing some acetone quantity so obtained is further distilled at different temperature to get crude oil free from acetone which is recovered separately. The crude oil can be used after refining as edible oil or it can also be used in manufacturing soap.

9. Admittedly, the same process is continuing. The essence of the dispute is that the soya oil emerging as a by-product continues to be a crude soya oil even though it has undergone many chemical process during the course of manufacture of lecithin powder. Admittedly, it is not of edible grade. However, that is not the only reason for classifying it as crude oil. The nature of the product has to be arrived at by its chemical quality and standards, if any, applicable to them. The lower authority examined the nature of the product as per the chemical report; applied the parameters mentioned in Indian Standards specification. Thereafter the findings were recorded to the effect that the impugned product is to be correctly classified as crude oil, whether or not degummed. We also find that the departments claim that another unit is selling soyabean oil with much higher price, hence there is a question about correct classification by the respondent, as not directly relevant to the issue in hand. The respondent categorically submitted that the other unit is manufacturing solvent extracted soya oil from soya seed, whereas they are engaged in the manufacture of lecithin powder from liquid lecithin and soya oil emerges as a by-product. We find the Revenue is not able to come up with any clear evidence to the effect that the classifications followed all along has to be changed as the product is not crude oil. The impugned order analysed available evidences and came to a categorical findings that the impugned goods are crude soya oil. As discussed above, nothing has been brought on record by the Revenue to controvert such finding.