vil Appeal No 13041305 of 1987
From the Judgment and Order dated 711987 of the Cus toms Excise and Gold Control Appellate Tribunal New Delhi in Appeal No 112083 C and 1806 of 1983 C Soli J Sorabjee Ravinder Narain AN Haksar PK Ram and DN Misra for the Appellant
AK Ganguli P Parmeshwaran A Subba Rao and Ms Sushma Suri for the Respondent
The Judgment of the Court was delivered by RANGANATHAN J
These are appeals under section 35L of the 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
The dispute pertains to the eligibility of the appellant to the concession granted by the Central Government under Rule 81 of the Central Excise Rules 1944 through notifi cation No 46 of 1972 subsequently amended by the notifica tion nos
153 of 1973 dated 24773 and 25 of 1975 dated 1375
Even though there are three notifications the point is common and both the appeals involve the same question
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 soap for each addition al percentage point increase in the use of such rice bran oil which is in excess of fifteen per cent of the total oils used in the manufacture of such soap
 To put it in simpler words the notification intends to grant a concession where the percentage of the rice bran oil used in the manufacture of soap exceeds fifteen per cent of the total oil consump tion in the manufacture
The extent of exemption is graded according to the percentage of rice bran oil in excess of fifteen per cent
For example if the rice bran oil is twenty per cent of the total oils used in the manufacture the duty exemption will be Rs750 per metric tonne of soap manufactured
The 1973 notification is on the same lines with the only difference that the duty exemption per metric tonne is Rs750 instead of Rs 150
The notification of 1975 raised the percentage of rice bran oil referred to in the 1972 notification from fifteen per cent to twenty five per cent but reduced the duty rebate from Rs750 to Rs350 per metric tonne
Another notification No 11875 has been referred to in the papers before us but it has no relevance to the question that falls to be decided here and is left out of account
The difficulty in the interpretation has arisen because the process of manufacture of soap in the assessee s factory at Ghaziabad did not involve the use of rice bran oil as such
This factory manufactured soap from rice bran fatty acid
The rice bran fatty acid was extracted from rice bran oil in the assessee s factory elsewhere
Incidentally it may be mentioned that the other factory is also licensed under the Excise Act for the manufacture of rice bran fatty acid
The excise authorities rejected the appellant s plea for exemption under the first three notifications on the ground that rice bran fatty acid and rice bran oil are technically and commercially two separate commodities
It was pointed out that the concession under the notifications is available only where soap is made from indigenous rice bran oil and other oils
This meant that rice bran oil must form part of the process of manufacture of soap in the factory which is manufacturing the soap and claiming the exemption
The notification will not apply merely because the soap is manufactured out of rice bran fatty acid which in turn has been obtained by hydrolysis of rice bran oil in a different factory may be one belonging to the same asses see which is a separate 842 unit of manufacture for purpose of excise duty
The Tribunal confirmed this view
It considered the terms of notification No 2575 and held We observe that the concession given under notification No 2575 is apparently with a view to encourage the use of rice bran oil in the soap industry
The point for consideration is whether the rice bran oil for the purpose of benefit of notification should be brought into the factory of manufacturer as such and then subjected to various pretreatments re quired for its use in the soap industry or whether the same could be treated outside the factory and the necessary fraction of the rice bran oil namely rice bran fatty acid required for the manufacture of soap alone could be brought into the factory as raw material and concession availed
It is not denied that for the use of rice bran oil the same has neces sarily to be pre treated first and rice bran fatty acid is required to be separated from glycerine
The appellants in the instant case have only brought in the rice bran fatty acid which has been obtained from rice bran oil by a process of pre treatment in one of their other factories
It is seen that the Govern ment of India have clarified vide their letter No P92272 CH
III dated 18774 that rice bran oil as such sometimes cannot be used directly and has to be subjected to pre treat ment before use in the manufacture of soap and that the exemption will be admissible in respect of rice bran oil even after pretreat ment for use in the manufacture of soap
Thus we find that the pre treatment of rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap
The short point therefore is whether such treatment should be done in the factory of the manufacturer or could be arranged to be done outside
In the scheme of Central Excise the various concessions levies etc are in respect of products manufactured by a particu lar licencee in the manufacturing unit so licensed and the necessary mechanism of con trols and accountability is with reference to a particular licensee and the manufacturer
The eligibility to or the concessional assess ment of a product manufactured by the manufac turer has to be determined with reference to the particular manufacturer subject to the fulfilment of the conditions as may be set out in the rele 843 vant concessional notification
In the instant case a verification will be required to be done in respect of the following 1 The nature of the oil used whether rice bran oil or otherwise 2 The quantum used 3 the processes of pre treatment carried out on the rice bran oil and the fraction thereof used for the soap making
Now if the rice bran oil has been pre treated outside the appellant s factory it is not possible for the jurisdictional authority to verify the facts in regard to above The Tribunal observed that concessional rates are allowed as incentives for use of certain raw materials and these rates are determined after taking into consideration the economics of operation involving the use of the said material in the manufacturing process in the manufacturer s factory
Holding that the notification did not envisage the use of rice bran fatty acid and it is the rice bran oil which is required to be used in the manufacture of soap for concessional assess ment purposes the Tribunal dismissed the appeals of the assessee
Hence these appeals
We are of opinion that the view taken by the Excise Authorities as well as by the Tribunal proceeds upon too narrow an interpretation of the notification
It is true as Mr Ganguli contended that an assessee claiming relief under an exemption provision in a taxing statute has to show that he comes within the language of the exemption
But in trying to understand the language used by an exemption notification 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
So far as b is concerned it is common ground before us that rice bran oil as such is not directly used in the manufac ture of soap
Rice bran oil contains glycerol and other impurities which have to be removed by a process of hydroly sis or hydrogenation and it is only the resultant purified rice bran oil that is actually used in the manufacture of soap
In fact the Tribunal has given a clear finding that a pre treatment to rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap
844 Thus even 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
So far as a is concerned the object of the notification as even the Tribunal finds is to grant a concession to a manufacturer of soap who manufac tures soap from rice bran oil to a substantial extent and thus discourage the use of edible oils in the manufacture
If these two aspects are considered together it is clear that the emphasis in the notification is not that rice bran oil should be used as raw material in the very factory which produces the soap
The requirement is that the soap manufac ture should to a prescribed extent be from rice bran oil as contrasted with other types of oil
The contrast is not between the use of rice bran oil as opposed to rice bran fatty acid or hydrogenated rice bran oil the contrast is between the use of rice bran oil as opposed to other oils
That is the ordinary meaning of the words used
These words may be construed literally but should be given their fullest amptitude and interpreted in the context of the process of soap manufacture
There are no words in the notification to restrict it to only to cases where rice bran oil is directly used in the factory claiming exemption and to exclude cases where soap is made by using rice bran fatty acid derived from rice bran oil
The whole purpose and object of the notification is to encourage the utilisation of rice bran oil in the process of manufacture of soap in preference to various other kinds of oil mainly edible oils used in such manufacture and this should not be defeated by an unduly narrow interpretation of the language of the notification even when it is clear that rice bran oil can be used for manufacture of soap only after its conversion into fatty acid or hydrogenated oil
The position will perhaps become clearer if we consider a case where an assessee manufactures soap out of hydroge nated rice bran oil which process of hydrogenation again is akin to the process of hydrolysis which yields rice bran fatty acid
The assessee will then be clearly entitled to the exemption under the notification inasmuch as the hydrog enated rice bran oil does not cease to be rice bran oil
See in this connection Tungabhadra Industries Ltd vs CTO  and Collector of Central Excise vs Jayant Oil Mills etc
CA 729 of 1983 and 2479 of 1987 decided by this Court on 31389
The answer cannot be different where rice bran oil is treated to yield rice bran fatty acid before soap is manufactured even if it be assumed that unlike hydrogenated oil the fatty acid is commercially speaking a different commodity
We are therefore of opinion that construing the notifications literally but reasonably in the light of the process of manufacture is explained by the Tribunal the soap manufactured by 845 the assessee is soap made from indigenous rice bran oil and is entitled to the exemption under the notifications to the extent permissible thereunder
Reference was made in the course of the arguments before us to a tariff advice issued as early as July 1974 by the Ministry of Finance in relation to the notification of 1972
It reads as under I am directed to invite a reference to this Ministry s notification No 4672 CE dated the 17th March 1972 which grants exemption from duty on soap which is produced from rice bran oil or from a mixture of rice bran oil and other oils
It has been brought to the notice of this Ministry that the benefit of exemption is not being allowed by the Central Excise Officers where rice bran oil or oil mixture is hydrogenated or pre treated before the soap is produced
The matter has been considered in detail with the concerned authorities and keeping in view the technical opinion tendered by them that rice bran oil as such sometimes cannot be used directly and has to be pre treated before use in the manufac ture of soap it is hereby clarified that the exemption will be admissible when the rice bran oil is after processing or pre treat ment used in the manufacture of soap
In this connection it may be stated that the exemption Notification does not preclude any processing or pre treatment including hydrogenation in the manufacture of soap if such processes are incidental and ancillary to the manufacturing operating Underlining ours This circular clarifies that the exemption will be admissi ble when the rice bran oil after processing or pre treat ment that is to say when hydrogenated rice bran oil or rice bran fatty acid is used in the manufacture of soap
But the counsel for the Union of India would have it that the circular postulates such exemption only where the pre treatment or processing is done is the same factory
He invites attention to the last sentence of the circular underlined by us above
We do not think this is the correct interpretation of the circular
In the first place it will be noticed that the circular does not specifically say that the pre treatment or processing should be in the same facto ry of the assessee
Secondly no clarification by a circular or tariff advice is at all necessary to cover cases where the conversion from rice bran oil into rice bran fatty acid is done in the same factory for to such a case 846 the notification will clearly apply
If it had been the intention to pin down the concession to cases where the pre treatment or processing is part of the manufacturing process within the same factory the last sentence would not have stated the obvious but would have read something like this In this connection it is emphasised that the exemption notification precludes any process ing or pre treatment including hydrogenation in the manufacture of soap except where such processes are incidental and ancilliary to the manufacturing operations
 The Tribunal has pointed out that the notification refers to the percentage of rice bran oil consumption and that unless such oil is directly used in the factory it will not be possible to work back from the weight of fatty acid used by the assessee the weight of rice bran  oil out of which such acid had been obtained
There are two answers to this objection
One is that if what we have stated is the correct interpretation of the notification the mere fact that there may be some difficulty in ascertaining the weight of oil cannot be a justification to refuse to give effect to that interpretation
The second is that a practi cal solution to this difficulty has in fact been evolved and that too in the case of the same assessee
Our attention has been invited to a circular issued by the Assistant Collector Ernakulam II dated 23677
This circular states that the matter had been considered pursuant to an appellate order passed in one of the cases relating to the same asses see and it had been decided to fix the formula for arriving at the correlation between rice bran oil on the one hand and hydrogenated rice bran oil or rice bran fatty acid on the other as below a 100 MT of hydrogenated  100 MT of rice bran oil rice bran oil b 100 MT of Fatty acid  115 MT of raw rice bran oil The circular refers to the fact that the present assessee in relation to its Cochin factory had accepted the above said formula and that the formula as given above was there fore finally fixed in arriving at the rice bran oil con tents of hydrogenated rice bran oil and of rice bran fatty paid for ascertaining the amount of exemption as per notifi cation nos
45 and 46 of 1972
It is true that this is only a local instruction issued by certain assessing authorities in Cochin
It is being referred to only show that there is no insuperable difficulty in ascertaining the weight of rice bran oil that that has been converted into fatty acid and thus 847 entered the process of manufacture in the assessee s factory particularly in view of the fact that even the process of conversion of rice bran oil into fatty acid or hydrogenated oil is carried but in a factory subject to excise jurisdic tion
The appellant has drawn our attention to certain ex tracts from a letter of the Ministry of Finance dated 6476
It poses the problem thus A doubt has been raised whether rebate of Central Excise duty would be admissible under Notification No 24 and 2575 CE dated 1 3 75 predecessor Notification Nos 45 and 46 of 1972 where rice bran oil and other minor oils are hydrogenated in one factory and sent to another factory for manufacture of soap
 The answer furnished is this The matter has been considered in the Minis try and it is felt that the purpose of rebate scheme of rice bran oil as well as other minor oils envisaged in the Notifications Nos 2475 and 2575 including their predecessor notifi cations is to encourage the use of inedible oils in the manufacture of soap so as to relieve the pressure on edible oils
In Board s letter F No 92272 CX
3 dated 18 7 74 and F No 92674 CX 3 dated 27 12 74 it was clarified that in respect of rice bran oil as well as other minor oils where such oils are subjected to various treatments including hydrogenation such treatment would not debar them from the rebate scheme in as much as such processing is essen tial in the process of manufacture of soap
As the notifications in question permit the rebate subject to identification of the oil as such had the manufacturer placed the matter before the concerned Collector pointing out his practical difficulties the Collector would have advised for suitable documentation if the existing documentations are not enough for the receipt processing movement and accounting of the oils for the concession in question
In the circumstances it is felt that the benefit of rebate cannot be denied to the manufacturers for want of prescribing a satisfactory procedure especially when it is contended by the manufacturers that they have opted for 848 the rebate scheme their factories are under excise control they have sufficient documen tary evidence about the receipt processing movement incorporationuse in the manufacture of soap
If as contended by the manufactur ers there is sufficient record maintained by them for excise purposes and the reasonable correlation is possible about the identity and use of such oils it would not be correct to deny the concession
In this connection it is of relevance to mention that a problem of similar nature had arisen with reference to some other excisable product and the Law Ministry was also consulted
An extract of their opinion is appended
It is therefore requested that taking into account the local practical situations existing in his jurisdic tion the Collector may prescribe suitable procedures for identification of such oils for a meaningful implementation of the Rebate Scheme
A copy of the Trade Notice issued in this regard by the Collector may be sent to DICCE under intimation to this Ministry
 Following this trade notices were issued on 25876 and 8277 in certain central excise jurisdiction the relevant portion of which reads thus A doubt has been raised whether the rebate on Central Excise Duty would be admissible under Notification No 4072 CE  4672 CE both dated 17372 as amended where the Rice Bran Oil and other Minor Oils are hydrogenated in one factory and sent to another factory for use in the manufacture of soap
It has been clarified that in respect of Rice bran oil and other Minor oils where such oils are subject to various treatment including hydrogenation such treatment would not debar them from the rebate scheme as envisaged in the above said Notifications
 The trade notice proceeds to set out the procedural safe guards to be followed in granting this relief which are unnecessary for our purpose
We endorse this as embodying the correct approach to the issue in this case This related to a claim of exemption in respect of ferti lisers super phosphates manufactured from sulphuric acid in a case where sulphuric acid was converted elsewhere into phosphoric acid and then used for the manufacture of the chemicals
849 We are therefore of the view that the terms of the notification do not have the effect of excluding cases where the manufacture of soap is done out of rice bran oil but the entire process is not carried out by the assessee itself
The question which one has to ask is does the assessee manufacture soap partly or wholly out of indigenous rice bran oil and the answer we think can only be in the affirmative
We therefore hold that that the assessee is entitled to the exemption under the notifications referred to above and that the departmental authorities and the Tribunal erred in not granting the said exemption to the assessee
The appeals are therefore allowed
However in the circumstances of the case we make no order as to costs
RNJ Appeals allowed


Summary:
The respondents two employees of a nationalised Bank and two account holders were charged with offences punisha ble under Sections 120B 420 468 471 IPC and 52 read with Section 51d of the Prevention of Corruption Act 1947
The FIR alleged that the two Bank employees entered into a criminal conspiracy with the two account holders to cheat the Bank and in pursuance thereof an amount of Rs54600 was allowed to be withdrawn by the account hold ers who had tendered three cheques aggregating to Rs54600 on the basis of the false credit entries in the books of accounts of the Bank and connected credit and debit vouchers were also prepared
The case against one of the account holders was later dropped
The High Court quashed the proceedings only against Respondent No 1 on the ground that the allegations made in the FIR did not constitute any offence of cheating or forgery
Against this decision the State as well as the Bank filed appeals in this Court
Quashing the proceedings against all the respondents HELD 1
If the allegations made in the FIR taken at their face value and accepted in their entirety do not constitute an offence the criminal proceedings instituted on the basis of such FIR should be quashed
837C In the instant case the Respondent No 1 and the other accused had accepted the three cheques in question and sent the same for clearance after debiting the LOC account
The cheques were encashed and the money was received by the Bank
It may be that there was some delay in crediting the LOC account or that the money against the three 835 cheques were credited in the accounts of the account hold ers but the allegations made either in the FIR or in the charge sheet do not show that they had acted dishonestly or with deliberate intention to cause wrongful gain or wrongful loss to the Bank
When the amount was allowed to be with drawn by the account holders necessary entries had to be made in the accounts of the Bank and these entries cannot be characterised as false
No document has been referred to in the FIR as the outcome of forgery
837E F 838A The High Court was therefore right in holding that the allegations made in the FIR did not constitute any offence of cheating or forgery and that as the criminal proceedings had been started on the basis of a FIR which did not contain any definite accusation and it amounted to an abuse of process of the Court they were liable to be quashed
837G 838B Since the allegations in the FIR are the same against all the accused persons the entire proceedings as against all the accused persons should be quashed
Accordingly the entire criminal proceedings are quashed
838C