UNION OF INDIA vs DELHI CLOTH & GENERAL MILLS

The Supreme Court ruled that the respondents, manufacturers of Vanaspati, were not liable for excise duty under item 23 of the First Schedule to the Central Excises and Salt Act, 1944, as they did not produce 'refined oil' at any stage of manufacturing. The Court clarified that excise duty is levied on the manufacture of goods, not on their sale, and that mere processing does not equate to manufacture as defined in Section 2(f) of the Act. The Court upheld the High Court's decision, stating that the process of deodorization, necessary for refined oil, occurred only after hydrogenation, thus no refined oil was produced by the respondents.