Fatty Acids, Wax and Gum emerged during manufacture of Refined Vegetable Oil are not subject to Excise Duty: CESTAT [Read Order]

Post-Sale Payments - Excise Duty - Taxscan

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently held that by-products emerging during the course of manufacture of refined vegetable oil such as fatty acids, Wax, and gum are not subject to Excise Duty.

Assessees in the present case, M/s Ricela Health Foods Ltd, M/s J.V.L. Agro-Industrial Ltd and M/s Kissan Fats Limited, were engaged in the manufacture of refined vegetable oil by processing of crude oil. During the course of such refining, fatty acids, wax, and gums emerged as by-products. Thereafter they claimed the exemption for the aforesaid products.

Counsels for the assessee, advocates V. Lakshmi Kumaran, N.K. Garg, Rahul Tangri and Dhruv Tiwari submitted that Notification 89/1995-CE exempted “waste, parings and scrap arising in the course of manufacture of exempted goods and falling within the schedule to the Central Excise Tariff Act, 1985” and further argued that expression “exempted goods” means excisable goods which are chargeable to nil rate of duty or are exempted from the whole of the duty of excise leviable thereon by any other notification.

After considering the facts and circumstances, the Tribunal bench comprising of President Justice Dr. Satish Chandra, Judicial Member S.K. Mohanty and Technical Member B. Ravichandran observed that the aforementioned incidental products are nothing but waste arising during course of refining of rice bran oil and applying the ratio of Apex court those are these cannot be considered as manufactured excisable goods and also declared that these cannot be considered as anything other than waste and as such will be covered by the exemption Notification No. 89/95-CE.

The bench has returned the appeals filed by the assessees to the regular Division Bench for decision on the points raised in the respective appeals by holding the fact that in a previous case the Supreme Court held that by-products arising during the course of manufacturing the main product not be subjected to excise levy only because it may have some saleable value, observing that the term “manufacture implies a change; every change, however, is not a manufacture”.

To Read the full text of the Order CLICK HERE