TATA OIL MILLS CO. LTD. versus COLLECTOR OF CENTRAL EXCISE

Citation: [1989] 3 S.C.R. 839 · Decided: 14-08-1989 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

\ f 
r 
TATA OIL MILLS CO. LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE 
AUGUST 14, 1989 
[S. RANGANATHAN AND T.K. THOMMEN, JJ.] 
Central Excises and Salt Act, 1944: Central Excise Rules 1944-
Sections 3, 4 and 35L/Rule 8(1) and Notification No. 46/72, 153, 73 and 
25/75-Rice Bran Oil converted into hydrogenated oil used tn 
manufacture of soap-Whether entitled to rebate scheme in respect of 
excise duty. 
The petitioner-appellant is engaged in the manufacture of various 
varieties of soaps. The dispute arose as to the eligibility of the appellants 
to the concession under rule 8(1) of the Central Excise Rule 1944 
through Notification No. 46 of 1972 subsequently amended by Notifica-
tion Nos. 153 of 1973 dated 24.7 .73 of 25 of1975 dated 1.3.75. 
Resolving the dispute as to the interpretation of rules whether rice. 
bran fatty acid is different from the rice Bran Oil as held by the 
Tribunal the Court came to the conclusion that the view taken by the 
Excise authorities as well as by the Tribunal proceeded upon too nar-
row an interpretation of the notification and erred in not granting the 
exemption to the assessee. While allowing the appeals, this Court, 
HELD: Rice bran oil contains glycerol and other impurities 
which have to be removed by a process of hydrolysis or hydrogenation 
and it is only the resultant purified rice bran oil that is actually used in 
the manufacture of soap. [843G] 
A factory which consumes rice bran oil in the manufacture of soap 
in its factory first converts the oil into hydrogenated oil or fatty acid and 
then manufactures soap out of the latter. [844A] 
A 
B 
c 
D 
E 
F 
In trying to understand the language used by an exemption notifi-
G 
cation one should keep in mind two important aspects; (a) the object 
) 
and purpose of the exemption and (b) the nature of the actual process 
involved in the manufacture of the commodity in relation to which 
exemption is granted. [843F] 
Construing the notifications literally but reasonably in the light of 
H 
839 
• 
840 
SUPREME COURT REPORTS 
[1989] 3 S.C.R. 
A 
the process of manufacture as explained by the Tribunal, the soap 
. ~ 
manufactured by the assessee is "soap made from indigenous rice bran 
oil" and is entitled to the exemption under the notifications lo the extent 
permissible thereunder. [844H-845A] 
The terms of the notification do not have the effect of excluding 
B 
cases where the manufacture of soap is done out of rice bran oil bot the 
l'-
c 
enlire process is not carried out by the assessee itself. [849A] 
Tungabhadra Industries Ltd. v. C. T.O., [1961] 2 SCR 14 and 
Collector of Central Excise v. Jayant Oil Mills etc., (CA 729 of 1983 
and 2479 of 1987) decided by this Court on 31.3.89, referred to. 
~ 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1304-
1305 of 1987. 
From the Judgment and Order dated 7 .1.1987 of the Customs 
Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal 
D 
No. 1120/83-C and 1806 of 1983-C. 
Soli J. Sorabjee, Ravinder Narain, A.N. Haksar, P.K. Ram and 
D.N. Misra for the Appellant. 
A.K. Ganguli, P. Parmeshwaran, A. Subba Rao and Ms. 
E 
Sushma Suri for the Respondent. 
The Judgment of the Court was delivered by 
RANGANATHAN, J. These are appeals under section 35L of 
F 
the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the 
Act'). The appellant, Tata Oil Mills Company Limited, is engaged in 
the manufacture of various varieties of soaps. The present dispute has 
arisen in relation to its factory at Ghaziabad in the State of Uttar 
Pradesh. 
G 
The dispute pertains to the eligibility of the appellant to the 
H 
concession granted by the Central Government \!Oder Rule 8(1) of the 
Central Excise Rules, 1944 through notification No. 46 of 1972, subse-
quently amended by the notification nos. 153 of 1973 dated 24.7.73 
and 25of1975 dated 1.3.75. Even though there are three notifications, 
the point is common and both the appeals involve the same question. 
·~. 
l 
TATA OIL MILLS CO. v. COLLECTOR OF C.E. [Jl,ANGANATIIAN, J.) 841 
The question arises this way. Ad Valorem excise duty at 20% is 
levied on soap which falls under item 15 of the first schedule to the 
Act. Notification No. 46 of 1972 exempts "such soap as is made from 
indigenous rice bran oil or or from a mixture of such oil with any other 
oils from so much of the duty of excise leviable thereon as is equivalent 
to the amount of duty calculated at the rate of one rupee and fifty paise 
per metric tonne of such s

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