LexUNION OF INDIA versus DELHI CLOTH & GENERAL MILLS
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1962 586 SUPREME COURT REPORTS [1963] SUPP. UNION OF INDIA "· DELHI CLOTH & GENERAL MILLS (B. P. SINHA, c. J., P. B. GAJENDRAGADKAR, K. N. WANCHOO, K. C. DAS GUPTA and j. 0. SHAH, JJ.) • E.xcise Duty-Manufacture of Vanaspaii-'Refined oil' ·if an intermediate product-Liability-'Manufacturing' and 'prowsing'-Distinction-Oentral Excises and Salt Act, 1944 (1of1944), s. 2 (.f)-First Schedule, !Um 23. The respondents, who were manufacturers of Vegetable products known as Vanaspati, were assessed to excise duty under item 23 of the First Schedule to the Central Excises and Salt Act, 1944, on what the taxing authorities called the manufac- ture of 'refined oi'' from raw oil which according to them fell within the description of "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". 1'he co.rrunon case made by the respondents in their petition under Art. 226 of the Constitution challenging the imposition was that for the purpose of manufacturing Vanaspati they purchased gTOundnut and til oil from the market and subjected them to different processe' before applying hydrogenation to produce Vanaspati and that nothing that they produced at any stage was covered by that item. Affidavits by experts were filed by both the parties aud the High Court found in favour of the respondents and allowed the petitions. The Union of India appealed. It was ur11ed on its behalf that before finally producing Vanas- pati the respondents produced at an intermediate stage what was known as •refined oil' in the market and although they might not sell it and although Vanaspati, when produced, was liable to excise duty under another item, that could not affect their liability. Held, that excise duty being leviable on the manufacture of goods and not on their sale, the petitioners would no doubt be liable if they produced 'refined oil', as known in the market, at an intermediate stage. But it was clear that there could be no 'refined oil' as known in the market without dcodorisatio,n according to the specification of the Indian Standards Institute and the affidavits of the experts. Since, however, the process 1 $.C.R. SUPREME COURT REPORTS 587 of deodorisation was admittedly applied in the respondents' factories only after hydrogenation was complete, they could not be said to produce 'refined oil' at any stage. Nor could the respondents be held to manufacture some kind of 'non-essential vegetable oil'. 'Processing' cannot be equated to 'manufacture' which nieans bringing into existence a new substance. The Legislature by definin~ the word 'manufacture' in s, 2(f) of the Act did not intend to make the mere processing of goods liable to duty. The words "all sorts" in item 23 are intended only to make it clear that vegetable non- essential oi!s. whether raw or refined, from whatever raw material produced, will be liable to excise duty. CIVIL APPELLATE jum~mcnoN : Civil Appeals Nos. 168-170 ofl960. Appeals from the judgment and order dated April 10, 1958, of the Circuit Bench of the Punjab High Court at Delhi in Civil Writs N'.:>s. 301, 302 and 347 ofl956. G. S. Pathak, B. Sen and R. If. !Jhebar, for the appellants. N. 0. Ohatterjee, A. N. Sinh1' and P. K. Mukherjee, for the respondent (in C.A. No. 168/60). A. V. Viswa'IU!tha Sostri, Sardar Bahadur, S. N. Andley and Rameshwar Nath, for the respon- dent in (C.A. No. 169/60). A. V. Viswa'IU!tha 8astri, S. f(. Kapnr and K. K. Jain, for the respondents (in C.A. No. 170/60). N. A. Palkhivala, J. 13. lJaduchanji, 0. G'. Mathur and Ravinder Narain. for the Interveners (in all the appeals.) 1962. October 12. The Judgment of the Court was delivered by DAS GUPTA, ].-These three appeals are against the orders of the Punjab High Court allowing JJ(j2 Union of /11tlia v. Delhi C 11th f1f Gtn1r«l Mills lJas Guptn, J. 1962 Union 1,f India v. V.IAi Olollt & Gmml Mills Das Gupt•, J. 588 SUPREME COURT REPORTS [1963] SUPP. three petitions under Art. 226 of the Constitution. The three petitions are by three different companies manufacturing vegetable products known as Vanaspati and they challenge the legality of the imposition of Excise duty on what was called by the taxing authorities as the manufacture of "refined oil" from raw oil. These petitions raise a common question of law as regards the liability to excise duty under It
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