Vegetable oil exempt from excise: SC

The Supreme Court has ruled that refined vegetable oil was exempt from excise duty, overruling a decree of the Customs, Excise and (Gold) Apellate Tribunal (CEGAT) and other excise authorities.

The issue had divided CEGAT, and a larger Bench had held that manufacturing was involved when an oil mill subjected edible vegetable to the refining process. Therefore, according to CEGAT, the final product was subject to central excise duty.

On an appeal by Shyam Oil Cake Ltd of Rajasthan, a Bench headed by Justice SN Variava has ruled that refining the edible oil did not amount to manufacture and there was no need to pay the levy.

"To start with, the product was edible vegetable oil. Even after refining, it remains edible vegetable oil," the judgment said.

Though the Supreme Court had held in the past that refining would not bring into existence a new product, the current judgment dealt with the position after the definition of manufacture was changed in 1986.

The new definition enlarged the scope of 'manufacture' by roping in processes which may or may not strictly amount to manufacture, provided those processes were specified in the statute.

The new judgment clarified that even after the amendment, refined vegetable oil would not be subjected to excise duty.