TMI Blog2024 (1) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... tch cannot be a determinative factor to decide whether the same as manufactured final product/byproduct or a waste/refuse arising during the course of manufacture of final products. Relying on the judgement of the Apex Court in COMMISSIONER OF CENTRAL EXCISE VERSUS INDIAN ALUMINIUM CO. LTD. [ 2006 (9) TMI 6 - SUPREME COURT ], the larger bench held that removal of unwanted material resulting in products like gum, wax, and fatty acid cannot be called as process of manufacture of such items. As such, incidental products are nothing but waste arising during the course of refining of rice bran oil and on applying the ratio of the Apex Court, this cannot be considered as manufactured excisable goods. The impugned order set aside - appeal allowed. - HON BLE MS. BINU TAMTA, MEMBER (JUDICIAL) And HON BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri M Mahipal, Chartered Accountant for the Appellant Shri Umesh Kumar, Authorized Representative for the Respondent ORDER HEMAMBIKA R. PRIYA The present appeals have been filed by M/s Jugal Kishore Vanaspati Products (P) Ltd. (hereinafter referred to as appellant) to assail the order in appeal no. 103- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic goods. In present case, the appellant manufactured refined ground nut oil. The intention of the appellant was to initiate a manufacturing process which results into the production of refined edible oil. Residues arising during of the process of the intended product for which the manufacturing process was initiated was not covered. He relied on the chapter note 6 of Chapter 15 which elucidated as to what amounts to manufacture in relation to refined edible vegetable oils. He also referred to the chapter note 4 wherein the classification of Soap Stock, oil foots and dregs etc was indicated. He contended that as per chapter note 6, the process of refining, treatment, bleaching, deodorizing would amount to manufacture in relation to refined edible vegetable oils. He contended that the chapter note is not applicable to the goods of heading 1522 wherein Soap Stock was liable to be classified. Consequently, the process undertaken by the appellant in respect of manufacture of refined edible oil, as per the specific chapter note 6 would not amount to manufacture under section 2(f) of the Central Excise Act for the waste products as specified in CETH 1522 i.e., Soap Stock. The counsel re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in the affidavit-in-reply itself. What also cannot be lost sight of is that the third limb of the proviso refers to the use of the material received in the manufacture of the end-product, namely the finished excisable goods. Hence the thrust of the manufacturing process must be the production of the finished product, namely, the aluminium sheets from the ingots. Aluminium ingots could by no stretch of imagination be considered to have been used by the Company for the manufacture of dross and skimmings but necessarily for the manufacture of aluminium sheets. Dross and skimmings cannot be said to be finished excisable goods . Further, dross and skimmings were not exempted from the whole of the duty of excise nor were they chargeable to nil rate of duty. 4. The learned counsel also relied on the decision of Union of India vs Ahmedabad Electricity Co. Ltd [2003(158) ELT 3(SC)], Commissioner of Central Excise Vs [Indian Aluminium Co. Ltd [2006(203)ELT 3(SC)] and Union of India Vs DSCL Sugar Ltd [2015(322)ELT 769(SC)] to support his contention that Soap Stock emerging during the manufacturing of refined edible oil is not manufactured goods on which any manufacturing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arketable, the same would be chargeable to Central Excise duty. In support relied on the larger bench decision of the Tribunal in the case of Markfed Vanaspati Allied Industry vs Commissioner of Central Excise, Chandigarh [2000(116)ELT 204(Tri)] held that by-product means something of value produced in the main product of a substance obtained, include specific process not a primary object, has held that spent earth arising in the course of refining oil, being of no value is not a new product/ byproduct. The learned AR distinguished some of the decisions relied upon by the learned counsel. 7. We have heard the learned Counsel and learned Authorised Representative. We note that the Larger Bench of this Tribunal in the case of M/s Ricela Health Foods Ltd vs Commissioner of Central Excise, Chandigarh [2018(361) ELT 1049(Tri.LB)] had considered the issue as to whether the fatty acids, Waxes and gum arising in the manufacture of refined vegetable oil are to be treated as WASTE for the purpose of exemption under Notification No. 89/95 CE or otherwise. The Larger Bench held that it is clear that the value that the product may or may not fetch cannot be a determinative factor to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills Company Ltd. - AIR 1963 SC 791 = 1977 (1) E.L.T. (J199) (S.C.). The Apex Court categorically held that dross do not answers the description of waste and scrap . 10. In view of the ratio adopted by the Apex Court while arriving at the above decisions, the point for consideration in the present dispute is the gums, waxes and fatty acid that emerge as a by-product can be considered as a product arising out of a manufacturing process. The appellants are engaged in converting crude rice bran oil into refined rice bran oil. In effect the processes undertaken by them are towards this intended final product. For producing refined rice bran oil, the gums and waxes available in the crude rice bran oil are to be removed by de-guming and de-waxing. Thereafter by a process of de-acidification/de-odourisation, by distillation the refined oil is obtained. In this final process fatty acid distillate (fatty acid with odour) is obtained as a waste. As can be seen the gums, waxes and fatty acid distillate are emerging due to removal/refining process of crude rice bran oil. As already noted the process is to obtain refined rice bran oil by removing these unwanted products along with spent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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