COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD versus M/S. GUJARAT AMBUJA EXPORTS LIMITED

Citation: [2016] 4 S.C.R. 38 · Decided: 08-08-2016 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2016] 4 S.C.R. 38 
A 
COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD 
B 
c 
D 
E 
f 
G 
II 
v. 
MIS. GUJARAT AMBUJA EXPORTS LIMITED 
(Civil Appeal No. 3302 of2008) 
AUGUST 08, 2016 
[A.K. SIKRI AND N.V. RAMANA, JJ.] 
Customs Act. 1962 -· s. 2 8, 28A B, 112111 ./A - Notification No. 
2112002-Cus dated 01. 03.2002 rlw. Notification No. 661200./-Cus 
dated 09.07.200./ - Notification allowed import of crude oil (non-
edible) on payment of concessional rate of customs duty i.e. @ 20% 
on~y when the same is used in the mamifacture of soaps or industrial 
fatty acids - Respondent-assessee manufactured refined edible oil 
(75%) out of the said imported crude oil - During the course of 
refining, Palm Fatty Acid emerged as by-product- Claim for benefit 
under notification treating the said by-product to be industrial Fatty 
Acid - Held: Jn order to ascertain ll'hether the asses.see can avail 
benefit of exemption from tax/duty under a particular notification. 
the assessee must satisfy the stipulations and conditions mentioned 
in the said notification under which the benefit is claimed - Thus, 
11'hen the main mamifacturing activity of the Responde/11-assessee 
relates to c Ii hie product like refined oil (75%) and ij' in that process 
25% of fatly (palm) emerges as a by- product, the requireme/lf of 
exemption notification not satisfied - Customs (import of goods at 
concessional rate of duty for 111a111ifacture of excisable goods) Rules, 
1996 - Rule 8 - foxation. 
Exemption Notification - Purpose of HSN Explanatory Notes 
- Held: In cases where exemption notification are to be construed, 
HSN Notes only serve as guide and not used to interpret the 
notification. 
Allowing the appeal, the Court 
HELD: 1. The present case relates to the admissibility of 
exemption notification. When the question arises as to whether 
exemption from tax/duty of a particular notification is available to 
assessee or not, the same has to be examined in terms of the 
said notification i.e. whether the stipulations and conditions 
38 
COMMNR. OF CENTRAL EXCISE, AHMEDABAD v. 
M/S. GUJARAT AMBUJA EXPORTS LTD. 
mentioned in the said notification are fulfilled by an assessee to 
claim the benefit of the notification. Notification No. 2112002 dated 
01.03.2002, as amended by Notification No. 66/2004 dated 
09.07.2004 is a general exemption notification which enlist number 
of products that are given full or partial exemption from payment 
of custom duty or additional duty. [Para 17] [47-A-C] 
2. In order to qualify for exemption, the goods should meet 
the following criterias, inter alia (i) should be non-edible (ii) should 
have Free Fatty Acid 20%. (iii) should be used for the manufacture 
of soaps, industrial fatty acids and fatty alcohol. [Para 18] [47-F-
G] 
3. In the instant case, crude palm oil which was imported 
was used for making edible products like refined oiJNanaspati. 
In the process of said manufacture, 25% nf fatty (palm) was 
produced and 75% was oil which was edible. Thus,,when the main 
manufacturing activity related to edible product which is 75%, if 
in the process 25% of fatty (palm) emerged. as a by-product it 
cannot be said that first requirement of exemption notification is 
satisfied. Even if Industrial Fatty Acid is to be treated as separate 
manufacturing activity and it is non-edible, the same is only to 
the extent of 25%. That would not satisfy the requirement of the 
exemption notification in question. [Para 19] [48-B-C] 
4. In case where exemption notification was to be construed, 
HSN Explanatory Notes only s-erve as guide and not used to 
interpret the same, as rightly reasoned by the Commissioner. 
The HSN in question categorically stipulates that Fatty Acid 
Distillate is characterized by high free fatty acif.I which cannot be 
25%. So the by-product is rightly discarded by the Commissioner 
as not coming within the nomenclature of PFAD. [Paras 20 and 
21) [48-D, F] 
State of Punjab v. Bhatinda District Co-op Milk P. Union 
Ltd. 2007 (217) ELT 325 (SC) - referred to. 
Case Law Reference 
2007 (217) ELT 325 (SC) 
referred to 
Para 22 
CIVIL APPELLATE JURISDICTlON: Civil Appeal No. 3302 of 
2008. 
39 
A 
B 
c 
D 
E 
F· 
G 
H 
40 
SUPREME COURT REPORTS 
[2016] 4 S.C.R. 
A 
From the Order No. A/2587/WZB/AHD/07 dated 12.10.2007 of 
B 
c 
D 
E 
F 
G 
H 
the CESTAT, West Zonal Bench, Mumbai in Appeal No. C/65/2007. 
K. Radhakrishna, Sr. Adv., Rupesh Kumar, Ritesh Kumar, Anirudh 
P. Mayee, B. Krishna Prasad, Advs. for the A
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