Noble Resources and Trading India Pvt. Ltd. v. UOI

Case snapshot

Sections / provisions: Manufacture

Questions before the Court / Tribunal

• Meaning of manufacture for industrial processing: The reported Supreme Court judgment sets out a framework for identifying manufacture where raw material undergoes processing and emerges as a commercially distinct product, in the context of soybean processing.

Material facts and background

JUDGMENT UJJAL BHUYAN, J. This appeal by special leave has been preferred against the judgment and order dated 05.08.2019 passed by the High Court of Gujarat at Ahmedabad (briefly ‘the High Court’ hereinafter) in R/Special Civil Application No.8596 of Signature Not Verified Digitally signed by ANITA MALHOTRA Date: 2025.05.14 18:40:18 IST Reason:

2007, which provided for exempting goods when imported into India under a duty free credit entitlement (DFCE) certificate, appellant was granted such a certificate for import of goods having a nexus with the products exported by it under the category ‘67/food products’. Under this duty free credit entitlement certificate (briefly ‘the certificate’ hereinafter), 2

to the appellant by the Office of the Commissioner of Customs, Kachchh Commissionerate stating that under the duty free credit entitlement scheme (briefly ‘the scheme’ hereinafter) vide notification No.53/2003-Cus. dated 01.04.2003, appellant was not eligible for benefits on the import of crude degummed soyabean oil as it was an agricultural product. Since goods in the nature of agricultural and dairy products were excluded under the said notification, appellant was liable to discharge the duties as applicable. Revenue was of the further view that the import made by the appellant should have a nexus with the product group exported. One of the goods exported by the appellant was soyabean meal extract while the product imported was crude degummed soyabean oil; there was no

passed by the Assistant Commissioner (Gr.-VII), Customs House, Kandla (briefly ‘Assistant Commissioner’ hereinafter) whereby the demand of duty to the tune of Rs.1,00,38,321.00 raised in the show-cause notice was confirmed. In the process appellant has been denied the benefit of duty free credit entitlement. 10.

Appellant / assessee submissions

Learned senior counsel for the appellant at the

notice by way of reply dated 14.09.2006. Appellant submitted that the product imported by it clearly did not fall within the scope of the term ‘agricultural and dairy product’ and cannot be excluded from the benefits of the notification bearing No. 53/2003. The exclusion was only with respect to agricultural products falling under Chapter Heading 1 to 24 of ITC (HS). Crude degummed soyabean oil imported by the appellant can by no means be said to be an agricultural product. Thereafter, appellant explained the various stages in the process of manufacturing of crude degummed soyabean oil. It was submitted

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

Department of Revenue whether the restriction regarding agricultural and dairy products would apply to all products derived from agriculture/diary origin. Central Board of Excise and Customs (Board) clarified that restriction regarding agriculture and dairy products as specified under the scheme shall mean that import of all types of products derived from agriculture/diary origin including crude edible oil shall not be permitted. Relevant portion of the circular dated 30.01.2004 reads as under: 4. It is, therefore, reiterated that the restriction regarding agriculture and dairy products as specified in DFCEC scheme for status holders and service providers shall mean that

and dairy products from the goods exempted from paying customs duty etc. on import as stated in the statutory notification No.53/2003, the circular has expanded the meaning of the expression ‘other than agricultural and dairy products’ to mean ‘all types of products derived from agriculture/dairy origin including crude edible oil’. What is therefore evident is that by way of the subsequent administrative circular dated 30.01.2004, the excluded goods of agricultural and dairy products as per the statutory notification dated 01.04.2003 has been enlarged to include all types of products derived from agriculture/dairy origin including crude edible oil. 31.

extraction of oil does not lose its identity. High Court relied on the test report placed on record to hold that unless the crude degummed soyabean oil is refined, it cannot be used for human consumption. High Court, therefore, rejected the contention of the appellant that after going through the process

steps taken for undergoing the aforesaid process. At this stage we need to make a note that while the High Court admitted that the process undertaken by the appellant may be a manufacturing process but the end product does not acquire a distinct identity. View of the High Court is that on extraction of oil soyabean does not lose its identity. Unless crude degummed soyabean oil is refined, it cannot be used for human consumption. Therefore, crude degummed soyabean oil is an agricultural product. 40.

Therefore, crude degummed soyabean oil cannot by any stretch of imagination be treated as an agricultural product. 43.

Amalgamated Estates Ltd. 8 , Madras High Court was examining the question on a reference made to it under Section 256(2) of the Income Tax Act, 1961: whether the Income Tax Appellate Tribunal was right in holding that the sale proceeds of eucalyptus oil extracted by the assessee from the leaves of eucalyptus trees grown by it was in the nature of agricultural income and hence not assessable to income tax? The reference was at the instance of the revenue. Finding of the Income Tax Appellate Tribunal (for short ‘the Tribunal’) was that eucalyptus oil was agricultural produce. It was in that backdrop the High Court considered the question as to whether eucalyptus oil extracted from eucalyptus leaves could be considered as an agricultural produce. Division Bench of the High Court held that the oil extracted from the eucalyptus leaves is a distinct product. In the process undertaken, eucalyptus leaves loses their original identity. Therefore, the High Court held that view taken by the

consumable product or not. Therefore, the High Court clearly missed the point by holding that because crude degummed soyabean oil was not further refined and therefore was not a consumable item; it did not have a distinct identity. This is

in the EXIM policy. Therefore, to understand the expression ‘agricultural product’, reference would have to be made to the dictionary meaning and also what is understood as an ‘agricultural product’ by applying the common parlance test. 54.

Operative decision and relief

Consequently, the appeal is allowed. Impugned

Authorities and precedents appearing in the judgment

• No reliable precedent list was extracted automatically; use the full judgment for the citation chain.

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Meaning of manufacture for industrial processing. The operative result is classified as Allowed. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Meaning of manufacture for industrial processing. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Use the judgment as a fact-specific precedent: match the statutory version, assessment period, procedural stage and evidentiary record before relying on the result.
• Check whether a later High Court/Supreme Court order has affirmed, reversed, distinguished or rendered the decision academic.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the authenticated official judgment PDF

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