The Supreme Court has ruled that Customs Duty Exemption applies to Crude Degummed Soybean Oil, which is classified as a non-agricultural product.
The controversy began when Noble Resources imported Crude Degummed Soybean Oil (CDSO) using a Duty-Free Credit Entitlement certificate. Customs officials claimed CDSO was an agricultural product and ineligible for the exemption, also arguing the imports were not linked to the company's exports. The Gujarat High Court supported the customs department, leading the exporter to appeal to the Supreme Court.
The bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan observed, “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 court observed that the term ‘agricultural product’ is not defined in the EXIM policy. Thus, its meaning must be determined by referring to dictionary definitions and by applying the common understanding of the term.
After applying the test, the Supreme Court disagreed with the High Court's classification of crude degummed soybean oil as an agricultural product. The Court allowed the appeal and set aside the High Court's judgment and order.
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