2025-VIL-31-SC-CU
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CUSTOMS Supreme Court Cases

Customs – Import of crude degummed soyabean oil, Agricultural product, Validity of Circular No.10/2004-Cus. dated 30.01.2004 – Appellant was granted a duty-free credit entitlement (DFCE) certificate under the Export-Import policy to import goods with a nexus to its exported products. The appellant imported crude degummed soyabean oil and claimed duty exemption under the DFCE scheme -Denial of exemption on the ground that crude degummed soyabean oil was an agricultural product and excluded from the DFCE Scheme - Whether crude degummed soyabean oil imported by the appellant is an agricultural product, and therefore excluded from the duty exemption under the DFCE scheme - HELD - The process undertaken by the appellant to convert soyabean into crude degummed soyabean oil amounts to manufacturing, as it results in a new and distinct commodity with a different name, character, and use from the original soyabean. Applying the common parlance test, crude degummed soyabean oil cannot be considered an agricultural product, as it is a distinct marketable commodity different from the primary agricultural product, soyabean - The test ‘manufacturing’ is not whether the end product is a consumable product or not. The High Court clearly erred in holding that because crude degummed soyabean oil was not further refined, therefore, was not a consumable item, it did not have a distinct identity and crude degummed soyabean oil is also an agricultural product - Crude degummed soyabean oil is a product different and distinct in character and identity from soyabean. The process carried out by the appellant using soyabean as raw material and ending in the product crude degummed soyabean oil is manufacturing. Crude degummed soyabean oil is not an agricultural product. Therefore, appellant would be entitled to the benefits under notification No.53/2003 dated 01.04.2003 – The impugned judgement by the High Court is set aside and the appeal is allowed - Validity of Circular No.10/2004-Cus. dated 30.01.2004 – HELD - The Circular No.10/2004-Cus. dated 30.01.2004 sought to expand the exclusion of "agricultural and dairy products" under the statutory notification to include all products derived from agricultural or dairy origin - In contra-distinction to the exclusion of agricultural and dairy products from the goods exempted from paying customs duty etc. on import as stated in the statutory notification No.53/2003-Cus, 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’. A Circular cannot restrict or whittle down the benefits granted under a statutory notification - The Circular No.10/2004-Cus dated 30.01.2004 insofar it expands the exclusionary clause in the statutory notification No.53/2003 dated 01.04.2003 would have no legal consequence.
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