Hon'ble Judges/Coram:
B.P. Sinha, C.J., J.C. Shah, K.C. Das Gupta, K.N. Wanchoo and P.B. Gajendragadkar

JUDGMENT

K.C. Das Gupta, J.

1. These three appeals are against the orders of the Punjab High Court allowing 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 Item 23 of the first schedule to the Central Excises and Salt Act 1 of 1944, on similar facts. The petitions were heard together and disposed of by a common judgment allowing the appeals and directing the excise authorities to withdraw the impugned demand of excise duty on the petitioners. The present appeals have also been heard together.

2. The facts alleged in the three separate petitions filed by the three petitioners (the respondents herein), the manufactures of Vanaspati, are practically the same. It is said that for the purpose of manufacturing Vanaspati the petitioners purchased groundnut and til oil from the open market or directly from the manufacturers of such oil. The oils thus purchased are subjected to different processes in order to turn them into Vanaspati. It is their case that the only finished product they manufacture from the raw materials thus purchased is Vanaspati which is liable to excise duty as a vegetable product. They contend that at no stage do they produce any new product which can come within the item described in the Schedule as "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." Accordingly, it is said, the demand for excise duty on the ground that they produce from the raw oils purchased a product which is liable to duty under item 23 of the Schedule (now item 12) is illegal.

3. In resisting these petitions the Union of India contended, in substance, that in the course of the manufacture of Vanaspati, the vegetable product from raw groundnut and til oil, the petitioners bring into existence at one stage, after carrying out some processes with the aid of power, what is known to the market as "refined oil". This "refined oil" falls 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 powers," and so is liable to excise duty. The affidavit filed by Mr. P. S. Krishnan, Chief Chemist, Central Revenue, Central Laboratory, Government of India, in support of this contention of the appellant, describes the process by which raw oil is manufactured into Vanaspati thus :-

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