TMI Blog1989 (3) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... facture hydrogenated rice bran oil which was sold to industrial consumers. The said hydrogenated rice bran oil is used as raw material in the manufacture of soap. The respondents, M/s. Jayant Oil Mills Pvt. Ltd. filed a classification list dated 20th May, 1981 in respect of the said goods classifying the same under Tariff Item 12 for approval and claimed exemption under Notification No. 9/60, dated 20th February, 1960. The Assistant Collector of Central Excise, Hyderabad III Division by an order dated 16th June, 1981 held that the hydrogenated rice bran oil was classifiable under Tariff Item 68 of the Central Excise Tariff (hereinafter referred to as 'CET'), because hydrogenated rice bran oil is solid at the ordinary temperature and therefore should be considered as fat and not as oil. The Assistant Collector observed that there was one opinion that the said goods could not fall under Tariff Item 12 as it was unfit for human consumption. The Assistant Collector observed that the said goods was new product after manufacture, having a distinct name, character and use as such it fell under Tariff Item 68 CET. The respondent on the other hand maintained before the Assistant Collector t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, to refer to the order of the CEGAT. The CEGAT noted that vide order dated 16th June, 1981 the Assistant Collector classified the hydrogenated rice bran oil manufactured by the respondents, M/s. Jayant Oil Mills Ltd. under Item 68 CET. The question, therefore, that was urged before this Court was whether the CEGAT was in error in holding that the hydrogenated rice bran oil was a process of manufacture which brought into existence a new product, i.e., hydrogenated rice bran oil. 8. Indubitably hydrogenation of rice bran oil is a process. But all processes need not be manufacture. It must be such a process which transforms the old articles into goods and changes the identity, use and the purpose of use of the goods undergone by the process. By the process which can be considered to be manufacture a new identifiable goods, in the sense known in the market as such must come into being. But that is one part of the view. It appears, however, that the melting point of hydrogenated rice bran oil is 45oC and it is in the nature of extra hardened vegetable process which is unfit for human consumption. It was taken to be classifiable under Tariff Item 68 CET. 9. Similar are the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rice Bran Oil - processed - in barrels - exempted -*33/63-C.E., dated 1-3-1963 as amended (*Rule 56A procedure to be followed for outside despatches)." The Assistant Collector approved the classification under Item 12 CET ("Vegetables non-essential oils, all sorts") with benefit of full exemption from duty under Notification No. 33/63-C.E., dated 1st March, 1963 as claimed by the appellants for soap making. The Collector, however, was tentatively of the opinion that the Assistant Collector's order was not correct. In exercise of his power of revision under the then Section 35A of the Act, the Collector called upon the appellant to show cause as to why the hardened oil should not be subjected to two-stage duty. After hearing the appellants, the Collector passed the orders by which he confirmed the two-stage duty. Being aggrieved by the Collector's order, the appellants filed a revision application before the Central Government which, on transfer of the proceedings to the Tribunal, was transferred to the Tribunal. 12. The matter was heard by a three-member Special Bench. It was resolved that a larger bench should be constituted and a larger bench had been constituted. It was note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. To be groundnut oil two conditions had to be satisfied :- it must be from groundnut and it must be "oil". The hydrogenated oil was from groundnut and in its essential nature it remained an oil. It continued to be used for the same purposes as groundnut oil which had not undergone the process. A liquid state was not an essential characteristic of a vegetable oil; the mere fact that hydrogenation made it semi-solid did not after its character as an oil. In our opinion, the same principle would be applicable to the facts and the problem herein. 14. In this connection, reference may be made to the observations of this Court in Champaklal v. State of Gujarat [AIR 1980 SC 1889] though it was a criminal case, this Court observed therein that vanaspati was essentially an oil although it was a different kind of oil than that oil (be it rapeseed oil, cotton-seed oil, groundnut oil, soyabean oil or any other oil) which forms its basic ingredient. Oil would remain oil if it retained its essential properties and merely because it had been subjected to certain processes would not convert it into a different substance. In other words, although certain additions had been made to and operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that item must be one for human consumption. It was not in dispute in that case that the product manufactured by the petitioners was used only for the industrial purposes and not for human consumption and, therefore, Tariff Item 13 could not be attracted. Whether Tariff Item 12 or Item 68 would be applicable to the products manufactured by the petitioners, it is well settled that resort could not be had to the residuary item if the product comes within the ambit of any other tariff item. It is, therefore, necessary to ascertain whether Item 12 is applicable for levy of excise duty in respect of hardened vegetable oil. Tariff Item No. 12 brings in its sweep "vegetable non-essential oils of all sorts" and the expression "all sorts" would bring in its ambit hydrogenated oil. There is hardly any distinction between vegetable oil in liquid form and the hydrogenated oil which is hardened with a melting point higher than 41oC. Apart from the distinction in the physical appearance, there is no distinction between oil and hydrogenated oil which is well supported by the decision of this Court in Tungbhadra's case (supra) where this Court held that several oils are viscous fluids but those ..... X X X X Extracts X X X X X X X X Extracts X X X X
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