TMI Blog1962 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... d disposed of by a common judgment allowing the appeals and directing the excise authorities to withdraw the impugned demand of excise duty on the petitioners. The present appeals have also been heard together. 2. The facts alleged in the three separate petitions filed by the three separate petitioners (the respondents herein), the manufacturers of Vanaspati, are practically the same. It is said that for the purpose of manufacturing Vanaspati the petitioners 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. It is their case that the only finished product they manufacture from the raw materials thus purchased is Vanaspati which is liable to excise duty as a vegetable product. They contend that at no stage do they produce any new product which can come within the item described in the Schedule as "vegetable non-essential oils all sorts in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power". Accordingly, it is said, the demand for excise duty on the ground that they produce from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the quality of the seed used for crushing and that of the original raw oil this refined oil will now generally be suitable for edible purposes of discriminating users and for the manufacture of toilet goods like hair oils and high class soaps. For certain users who are even more discriminating this oil may be subjected to a further process of deodorisation. The difference between raw vegetable non-essential oils and refined vegetable oils will clearly be seen on examination of the two products. The refined oil will generally be colourless or only slightly coloured. It will be perfectly clear and in many cases it may have no odour. The raw oil, on the other hand, will have a certain amount of turbidity by or sediment at the bottom and will also be somewhat deep in colour. I further say that sometimes refined oil obtained above is subjected to a process of further deodorization. Such oil can be correctly described as refined and deodorised oil. As far as known to me, the grades of oils are separately marketed in the country; as for example, "groundnut oil" and "refined groundnut oil" the latter generally with a distinctive label when marketed in containers of approximately 4 ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cl. 23 (now cl.12) and is therefore liable to duty under this clause; and the fact that they do not put this "refined oil" on the market but use it to produce a finished product known as vanaspati product cannot affect this liability. 8. Excise duty is on the manufacture of goods and not on the sale. Mr. Pathak is therefore right in his contention that the fact that the substance produced by them at an intermediate stage is not put in the market would not make any difference. If from the raw material has been brought into existence a new substance by the application of processes one or more of which are with the aid of power and that substance is the same as "refined oil" as known to the market an excise duty may be leviable under Item 23 (the present Item 12). But has it been shown that the substance produced by the petitioners is at any intermediate stage before vanaspati comes into existence, "refined oil" as known to the market? We are not satisfied that this has been shown. As already stated, a summary of the numerous processes necessary to turn the raw ground nut or til oil into vegetable product has been given in the affidavits sworn to by the experts on both sides. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opies of extracts of a book by Alton Bailey of the name "Cottonseed and Cottonseed Products" and another book by the same author of the name, Industrial Oil and Fat, Products" and a third book of the name, "Vegetable Fats and Oil" by G.S. Jamiesom. Mr. Jamiesom's statement does not at all make it clear that refined oil is put on the market without deodorisation. Mr. Bailey appears to have stated in his book on "Industrial Oil and Fat Products" that the term "refining" refers to any purifying treatment designed to remove free fatty acids phosphatides or mucilaginous material or other gross impurities in the oil; it excludes "bleaching" and also "deodorisation". The extracts from this book also do not clearly show that before deodorisation, the oil which has been refined by the purifying treatment, is put on the market. The extract from Bailey's book on "Cottonseed and Cottonseed Products" contains a passage in these words :- "In a discussion of the composition and characteristics of cotton-seed oil, three kinds of oil are to be distinguised. They are : (a) crude oil, which is the oil as it is expressed from the seed, and the commodity shipped from the oil mills; (b) refined oil, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find no warrant in law. The word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance," however minor in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American judgment. The passage runs thus :- "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." 15 It is helpful to consider also in this connection the ordinary meaning of the word "goods". For, by the very words of the Central Excises and Salt Act 1944, excise duty is leviable on "goods". The Act itself does not define "goods" but define "excisable goods as meaning" "goods specified in the First Schedule as being subject to a duty of excise and includes salt". On the meaning of the word 'goods' an interesting passage is quoted in the Words and Phras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not used in the whole process of manufacture using the word in its ordinary sense, will not be available. It is only with this limited purpose that the legislature, in our opinion, inserted this definition of the word 'manufacture' in the definition section and not with a view to make the mere "processing" of goods as liable to excise duty. 20. Mr. Pathak wanted to derive some assistance for his argument from the words "all sorts" as used in the clause. According to him, the words "all sorts" will be superfluous unless interpreted to mean "whether bringing into existence a new substance or not". The reasoning is clearly fallacious. The words "all sorts" have been used to make it clear that "vegetable non-essential oils" whether raw or refined and from whatever raw material produced will be liable to excise duty. Refined oil is one sort; raw oil is another sort. But as the duty is on the manufacture of goods, that is, on the bringing into existence a new substance known to the market before it can be subjected to duty. 21. We are therefore of opinion that the High Court was right in its conclusion that there was no legal basis for the demands of excise duty which we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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