ivil Appeal No 729 of 1983
From the Judgment and order dated 20111987 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No FA No 132583 D Order No 92087 D
WITH Civil Appeal No 2479 of 1987
From the Judgment and Order dated 2821986 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No EDSB T 1557 I C Order No 18 11986 C
AK Ganguli Hemant Sharma and Mrs Sushma Suri for the Appellant in CA No 729188
Soli J Sorabjee for the Appellant in CA No 2479 of 1987
Harish N Salve Ravinder Narain PK Ram DN Misra and section Ganesh for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This is an appeal under section 35 L of the Central Excises  Salt Act 1944 hereinafter referred to as the Act  from the order of the Customs Excise and Gold Control Appellate Tribunal hereinafter referred to as CEGAT 
The respondent Ms Jayant Oil Mills Pvt Ltd Hyderabad manufactures hydrogenated rice bran oil which was sold to industrial consumers
The said hydrog enated rice bran oil is used as raw material in the manufac ture of soap
The respondents Ms Jayant Oil Mills Pvt Ltd filed a classification list dated 20th May 1981 in respect of the said goods classifying the same under Tariff Item 12 for approval and claimed exemption under notifica tion No 960 dated 20th February 294 1960
The Assistant Collector of Central Excise Hyderabad III Division by an order dated 16th June 1981 held that the hydrogenated rice bran oil was classifiable under Tariff Item 68 of the Central Excise Tariff hereinafter referred to as CET  because hydrogenated rice bran oil is solid at the ordinary temperature and therefore should be considered as fat and not as oil
The Assistant Collector observed that there was one opinion that the said goods could not fall under Tariff Item 12 as it was unfit for human consumption
The Assistant Collector observed that the said goods was new product after manufacture having a distinct name character and use and as such it fell under Tariff Item 68 CET
The respondent on the other hand maintained before the Assistant Collector that the said goods was semi solid and still vegetable non essential oil failing under Tariff Item 12 CET
Being dissatisfied with the order dated 16th June 1981 the respondent appealed before the Appellate Collector of Central Excise Madras
By an order dated 30th November 1981 the Appellate Collector held that hydrogenated rice bran oil is classifiable under Tariff Item 12 CET and there fore ordered for consequential relief to the respondent
The order of the Appellate Collector holding that the said products are classifiable under Item 12 CET had not been reviewed by the Central Government under section 362 of the Act
The appellate Collector was therefore of the view that even after the superhardening or hydrogenation vegetable oil did not cease to be oil even it became solid 
The Central Government Ministry of Finance Department of Revenue being of the view that the order of the Appel late Collector was not proper legal and correct issued a show cause notice dated 12th May 1982 to the respondent
The Central Government informed the respondents in the show cause notice that it appeared to the Government that the hydrogenation of rice bran oil is a process of manufacture which brings into existence a new product known as hydroge nated rice bran oil in commercial parlance having a distinct name character and use and this end product would have been classified under Item 13 had it been fit for human consump tion It was further observed in the said show cause notice by the Government that as the melting point of the hydroge nated rice bran oil is more than 45degree C it was of the nature of extra hardened vegetable product which was unfit for human consumption and since it was distinct from vegeta ble 295 non essential oil it would prima facie be classifiable under the residuary item 68 CET
The respondents were therefore called upon to show cause as to why the order of the Appellate Collector should not be set aside and that of the Assistant Collector re stored
The matter came up before the CEGAT
The CEGAT noted in its impugned order that the appeal was concluded by the judgment of the five member Bench of the Tribunal in the case of Ms Tata Oil Mills Co Ltd 1986 Vol
and held that the order dated 30th November 1981 of the Appellate Collector was correct and dismissed the appeal of the appellant
It is necessary therefore to refer to the order of the CEGAT
The CEGAT noted that vide order dated 16th June 1981 the Assistant Collector classified the hydrogenated rice bran oil manufactured by the respondents Ms Jayant Oil Mills Ltd under Item 68 CET
The question therefore that was urged before this Court was whether the CEGAT was in error in holding that the hydrogenated rice bran oil was a process of manufacture which brought into existence a new product ie hydrogenated rice bran oil
Indubitably hydrogenation of rice bran oil is a process
But all processes need not be manufacture
It must be such a process which transforms the old articles into a goods and changes the identity use and the purpose of use of the goods undergone by the process
By the process which can be considered to be manufacture a new identifiable good in the sense known in the market as such must come into being
But that is one part of the view
It appears however that the melting point of the hydrogenated rice bran oil is 45degree C and it is in the nature of extra hardened vegetable proc ess which is unfit for human consumption
It was taken to be classifiable under Tariff Item 68 CET
Similar are the facts in Civil Appeal No 2479 of 1987 before us in the matter of Collector of Central Excise Madras vs Ms Tara Oil Mills Co Ltd There also the CEGAT allowed the appeal of the respondents and held that the extra hardened rice bran oil continued to remain as oil classifiable under Item 12 CET
It is necessary to decide in both these matters the nature of the product
Rice bran oil is extracted out of rice bran by solvent extraction method
After such extraction rice bran oil obtained is in liquid form
296 The parties purchase rice bran oil from the market and process it
The process is reported to be as follows
The oil is heated to above 80degree C and the impurities are removed by adding exalic acid and caustic lye
The purified oil is then bleached by heating it to 85degree C to 100degree C and thereby treating with fullers earth
The processed oil is then hardened by passing it through hydro gen gas
During hydrogenation the oil absorbs two atoms of hydrogen and the unsaturated fatty acid present in the oil becomes saturated
The oil is then in a semi solid condition and its melting point is raised to 45degree C or more
In the hardened state the oil looks like vanaspati or vegeta ble product to use the Central Excise terminology but there is a difference in the degree of hydrogenation of the two
The melting point of vanaspati which is commonly used as cooking medium does not exceed 37degree C while the melting point of hardened rice bran oil in dispute before us is between 45 degree C 52 degreeC At such high melting point the oils are no longer edible by human beings
In order to differentiate between edible hydrogenated oils vanaspati and super hydrogenated vegetable oils the latter are referred to as extra hardened oil or super hard ened oil
The record before us shows that they are also known as vegetable tallow  or hard lump  or hardened technical oil of industrial hard oil  or just hardened oil 
This hardening of oil is necessary for soap making otherwise the soap on coming into contact with water is likely to become soggy
The respondent use the hardened oil for soap making within their factories
Besides its use in soap making the extra hardened oil is also put to various other industrial uses such as for application as grease
The dispute started when the appellants filed their classification list containing the following entry at section No 3 3
Rice Bran Oil processed In barrels exempted 3363 CE dated 131963 as amended Rule 56A procedure to be followed for out side despatches
 The Assistant Collector approved the classification under item 12 CET Vegetable non essential oils all sorts with benefit of full exemption from duty under notification No 3363 CE dated 1st March 1963 as claimed by the appel lants for soap making
The Collector however was tenta tively of the opinion that the Assistant Collector s order was not correct
In exercise of his power of revision under the then section 35A of the Act the Collector called upon the appellant to show cause as to why the hardened oil should not be subjected to two stage duty
After hearing the appellants the 297 Collector passed the orders by which he confirmed the two stage duty
Being aggrieved by the Collector s order the appellants filed a revision application before the Central Government which on transfer of the proceedings to the Tribunal was transferred to the Tribunal
The matter was heard by a three member Special Bench
It was resolved that a larger bench should be constituted and a larger bench had been constituted
It was noted by the Bench that irrespective of the fact whether extra hardened rice bran oil produced by the parties was classified under Item 12 CET of Item 68 CET it would remain fully exempt
On behalf of the parties the respondents herein it was argued before the Tribunal that hydrogenation or hardening was a process in the course of manufacture of a soap
The extra hardened oil came into existence during soap manufacture at an intermediary stage and such oil was not a new product by itself
Secondly it was urged that even if the extra hard ened oil was considered as a new product its character still remained that of oil
It was the same oil though in a hardened or semi solid form
The form was not material as it only meant that by application of heat at 45degree C or more it would again turn into liquid oil
As such the oil even in its hardened form continued to remain under Item 12 CET as it still was essentially oil only
The process of hydrogenation was intended to make the oil fit for soap making
Only that part of hydrogenated oil as was fit for human consumption fell under item 13 vegetable product the rest remained under item 12 vegetable non essential oils all sorts    Reference may be made to the decision of this Court in Tungabhadara Industries Ltd vs The Commercial Tax Offi cer Kurnool  There the appellant purchased groundnuts out of which it had manufactured groundnuts oil
It also refined the oil and hydrogenated it converting it into Venaspati
It sold the oil in the three states
Under the Madras General Sales Tax Act 1939 and the Turnover and Assessment Rules for determining the taxable turnover the appellant was entitled to deduct the purchase price of the groundnuts from the proceeds of the sale of all groundnut oil
The High Court in that case held that the appellant was entitled to the deduction in respect of the sales of unrefined and refined groundnut oil but not in respect of the sales of hydrogenated oil on the ground that the vanas pati was not groundnut oil but a product of groundnut oil
This Court however held that appellant was entitled to the deduction in respect of the sales of hydrogenated groundnut oil also
The hydrogenated groundnut oil continued to be groundnut oil notwithstanding the processing which was merely for the purpose of rendering the 298 oil more stable
To be groundnut oil two conditions had to be satisfied it must be from groundnut and it must be oil
The hydrogenated oil was from groundnut and in its essential nature it remained an oil
It continued to be used for the same purposes as groundnut oil which had not under gone the process
A liquid state was not an essential char acteristic of a vegetable oil the mere fact that hydrogena tion made it semi solid did not alter its character as an oil
In our opinion the same principle would be applicable to the facts and the problem herein
In this connection reference may be made to the obser vations of this Court in Charapaklal vs State of Gujarat AIR 1980 SC 1889 though it was a criminal case this Court observed therein that vanaspati was essentially an oil although it was a different kind of oil than that oil be it rapeseed oil cotton seed oil groundnut oil soyabean oil or any other oil which forms its basic ingredient
Oil would remain oil if it retained its essential properties and merely because it had been subjected to certain processes would not convert it into a different substance
In other words although certain additions had been made to and operations carried out on oil it would still be classified as oil unless its essential characteristics had undergone a change so that it would be misnomer to call it oil as under stood in ordinary parlance
Such change was not supported by the evidence in that law
The Tribunal found so and it is a question of fact that the hydrogenated rice bran oil still remained oil
On behalf of the interveners it was further submitted before the Tribunal that Item 12 CET which dealt with vege table non essential oils all sorts was a specific exhaus tive and all pervasive entry and it continued to cover the extra hardened oil
Our attention was drawn to the different degree of hydrogenation
It may be appropriate to refer to the relevant Items in the First Schedule to the Central Excise Tariff
Item 12 provides as follows 12
Vegetable non essential oils all sorts in or in relation to the manufac ture of which any process is ordinarily car ried on with the aid of power
 Item 13 provides as follows 13
Vegetable Product 299 Vegetable Products  means any vegetable oil or fat which whether by itself or in admix ture with any other substances has by hydrog enation or by any other process been hardened for human consumption
 The Tribunal therefore in our opinion was right on a conspectus of the relevant factors in coming to the conclu sion that edible rice bran oil falling under Tariff Item 12 CET would even after extra hardening continue to fall under Tariff Item 12 and not fall under Tariff Item 68 because it would be vegetable non essential oils all sorts in or in relation to the manufacture of which any process is ordi narily carried on with the aid of power
In that view of the matter it would not come within Tariff Item 68
The Tribu nal it appears to us has considered the technical side of it the manner of its production and in view of the princi ple laid down by Tungbhadara Industries Ltd s case supra which in our opinion was essentially applicable to the facts of this case
The Tribunal in our opinion came to the correct conclusion
Justice Pendse of the Bombay High Court in IVP Ltd and Anr
vs Union of India  Ors had occasion to consider some aspects of this problem
It was held by the learned Judge that the plain reading of Item 13 CET indicated that the vegetable products which fell under that item must be one for human consumption
It was not in dispute in that case that the product manufactured by the petitioners was used only for the industrial purposes and not for human consumption and therefore Tariff Item 13 could not be attracted
Whether Tariff Item 12 or Item 68 would be applicable to the products manufactured by the petitioners it is well settled that resort could not be had to the residuary item if the product comes within the ambit of any other tariff item
It is therefore necessary to ascertain whether Item 12 is applicable for levy of excise duty in respect of hardened vegetable oil
Tariff Item No 12 brings in its sweep vegetable non essential oils of all sorts and the expression all sorts would bring in its ambit hydrogenated oil
There is hardly any distinction between vegetable oil in liquid form and the hydrogenated oil which is hardened with a melting point higher than 41 C Apart from the distinction in the physical appearance there is no distinction between oil and hydrogenated oil which is well supported by the decision of this Court in Tungbhadra s case supra where this Court held that several oils are viscous fluids but those do harden and 
assume semi solid condition on the lowering of the temperature
300 Therefore it is obvious that hydrogenated oil is nothing but hardened vegetable oil which would fall within Item 12 CET for the purpose of central excise duty
Our attention was drawn to Encyclopaedia Britannica 1968 Vol
19 p 302 where preparation of rice is indicated
It states as follows The Kernel of rice as it leaves the thresher is enclosed by the hull or husk and is known as paddy or rough rice
Rough rice is used for seed and feed for livestock but most of it is milled for human consumption by removing the hulls
Rice is a good energy food and is consumed in vast quantities in the Orient
In the Western Hemisphere however rice is not the staple cereal food except in certain Caribbean islands
 Our attention was also drawn to certain obserVations of the Tribunal in Vital  Vital Oil Pvt Ltd vs Collector of Central Excise Bombay where the Tribunal observed that the department advocates assessment of hard ened technical oil under item 68
This item is only for goods not specified anywhere else
According to Department all other goods not specified elsewhere is more specific than vegetable non essential oils all sorts
But it has to be borne in mind that the basic rule of construction is that a more specific item should be preferred to one less so
It does not take much to see whether goods not speci fied elsewhere is more specific than vegetable non essen tial oils for a product that has an oily nature is pro duced from an oil has the uses of an oil and indeed looks like an oil and is quite commonly accepted and spoken of as an oil and is so related to oil that it has a little or no chemical
If hydrogenated oil can harden so can many oils if subjected to heat loss in winter or by chilling
It appears to us therefore that Item 12 is more specific than Item 68 for all hardened technical oil not fit for human consumption and such would cover under this category
In the aforesaid view of the matter we are of the opinion that the Tribunal particularly emphasised that the hardened technical oil is the same thing as the oil from which it is made
It is clearly akin to the oil in homo logue a product of scientific modification but unaltered in its essential character
Therefore in our opinion the Tribunal was right in the conclusion it arrived at
301 The Tribunal in both the appeals had taken into consid eration all relevant and material factors and market par lance and borne in mind the correct legal principles
The decision of the Tribunal therefore cannot be assailed
In the premises as both the appeals deal with the same facts these are dismissed
There will however be no order as to costs
Y Lal Appeals dis missed


Summary:
Section 3 of the Bihar Land Reforms Act 1950 provided for vesting an estate or tenure in the State
Section 2h of the defines a mine to mean any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried on
Sub clause iv thereto includes there in all open cast workings and sub clause vi takes in all lands buildings etc in or adjacent to a mine and used for the purposes of the mine
Section 31 provides for acquisi tion of rights of owners in respect of coal mines by the Central Government
Section 51empowers the Central Govern ment to direct vesting of the said rights in a Government company
Section 61 refers properties vested in the Cen tral Government free from mortgages etc
The appellants instituted a suit in respect of a large expanse of land for declaration of their homestead right thereto
The possession in the zamindari right was settled to their ancestor in 1949
They therefore claimed owner ship of leasehold land
The respondent Government company resisted the suit on the grounds firstly that the disputed land formed part of a colliery which had vested in the Central Government and thereafter in the company under the provisions of the and secondly that the interest claimed by the plaintiffs automatically stood extinguished with the vesting of the estate of the plaintiffs  lessor by reason of the notification issued under section 3 of the Land Reforms Act
The trial court negatived all the defences anti decreed the suit
284 Reversing the said decree the High Court held that the lease granted to the plaintiffs was an encumbrance which was annihilated with the issuance of the notification under section 3 of the Land Reforms Act and that the lease having thus come to an end the plaintiffs had no title to be declared
It further found that the salt lands were adjacent to a coal mine and were being used for the purpose of the said mine
Therefore it held that the suit lands were more within the meaning of the Nationalisation Act and that what vests under that Act is the mine and not merely the interest of the owner of the mine
Dismissing the appeal HELD 11 The evidence on record both for the plaintif fappellants and the defendant respondents makes it evident that the land was being used for the purpose of the mine for carrying on the mining operations in respect of the part of the seam lying immediately below the surface
There cannot be any working mine without the surface being included in that concept
If the surface does not form part of the concept of mine it is not possible to have any excavation
Section 2hiv of the includes open cast working within the definition of mine  289E F 12 The suit land was also adjacent to a coal mine and was being used for the purposes of the said mine namely stacking of the coal and effecting local sale thereof
It was therefore a mine as defined under section 2hvi of the Act
289G 2
Under section 3 of the said Act the right title and interest of the owners in relation to the coal mines stood transferred to and vested absolutely in the Central Govern ment free from encumbrances
It was immaterial whether the mine belonged to the State or to a private party
The appel lant s title to the said land if any thus stood extin guished
289H 290A State of West Bengal vs Union of India 1964 1 SCR 371 referred to
The parties went to trial knowing fully well what they were required to prove
They have adduced evidence of their choice in support of the respective claims
That evidence has been considered by both courts below
The appellants cannot now turn round and say that the evidence should not be looked into
This is a well accepted princi ple
290C D 285 Kunju Kesavan vs
MM Philip  Ors   referred to