End‑Use Cannot Curtail Customs Exemptions for Crude Edible‑Grade Oils: Commentary on VVF India Ltd v. Union of India (Gujarat High Court, 21 Nov 2025)

End‑Use Cannot Curtail Customs Exemptions for Crude Edible‑Grade Oils:
Commentary on VVF India Ltd v. Union of India, Gujarat High Court (21 November 2025)

1. Introduction

The decision of the Gujarat High Court in VVF India Ltd & Anr. v. Union of India & Ors. addresses a recurring and commercially significant issue in customs law: whether the benefit of exemption notifications for “crude and edible grade” vegetable oils can be made contingent upon the end-use of the imported goods, even when the notification itself contains no such condition.

The petitioners, VVF India Ltd, import crude palm kernel oil (CPKO) edible grade, which they use as a raw material for manufacturing personal care and oleochemical products (soaps, fatty acids, fatty alcohols, etc.). The Directorate of Revenue Intelligence (DRI) issued a large-value show cause notice (SCN) alleging that the petitioners had wrongly claimed the concessional/Nil rate of duty under:

  • Notification No. 21/2002-Cus, Serial No. 33A (now rescinded but relevant historically), and
  • Notification No. 12/2012-Cus, Serial No. 57,

both of which grant exemption to goods falling under CTH 1508, 1509, 1510, 1512, 1513, 1514, 1515 described as “All goods, crude and edible grade”.

The DRI contended that since the imported crude palm kernel oil, though of “edible grade”, was:

  • not fit for immediate direct human consumption, and
  • actually used for industrial purposes (manufacture of soaps, etc.),

the petitioners were not entitled to the exemption. This argument effectively reintroduced an end-use requirement into the exemption—an approach previously rejected in Inter Continental (India) v. Union Of India, a landmark Gujarat High Court judgment affirmed by the Supreme Court.

The High Court, speaking through Bhargav D. Karia J. (for the Bench with Pranav Trivedi J.), ultimately quashed the show cause notice as without jurisdiction, reaffirming and significantly extending the principle that:

“Edible grade” is a quality-based standard tied to food law specifications (PFA/FSSAI), and
customs exemption notifications using that term cannot be cut down by adding a non‑statutory end‑use condition via circulars or departmental interpretation.

2. Factual and Procedural Background

2.1 The Petitioner’s Business and Imports

VVF India Ltd (petitioner no. 1) manufactures various personal care and oleochemical products such as:

  • soap products,
  • fatty acids, and
  • fatty alcohols.

For this, it imports crude palm kernel oil (CPKO) edible grade under Customs Tariff Heading (CTH) 1513 21 10, describing the goods as “Crude Palm Kernel Oil (Edible Grade)” and claiming:

  • Nil rate of duty under Notif. 21/2002-Cus, Sr. No. 33A (till it was replaced), and
  • thereafter, Nil / 2.5% rate under Notif. 12/2012-Cus, Sr. No. 57 (following amendment by Notif. 2/2013-Cus).

2.2 Testing and Food Law Compliance

For each consignment, customs authorities:

  • drew samples, and
  • sent them to the Customs Chemical Examiner / Food & Drugs Laboratory, Baroda, and to the Port Health Officer, Kandla.

Consistently, these laboratories and officers certified that the samples:

  • conformed to the standards for “palm kernel oil” under:
    • Appendix B of the Prevention of Food Adulteration (PFA) Rules, 1955, and
    • later, Regulation 2.2.1(21) of the Food Safety and Standards (Food Products and Food Additives) Regulations, 2011 (FSSR 2011),
  • i.e. they were “of edible grade” as per food law standards, but
  • were not yet fit for direct human consumption, and could be used for human consumption only after refining to meet standards for “refined vegetable oil” (Reg. 2.2.1(16)) and additional parameters (such as flash point and hexane content).

The PFA regime was repealed and replaced by the Food Safety and Standards Act, 2006 and the FSSR 2011, but the standards for palm kernel oil remained substantively the same.

2.3 Search, Panchnama, and Central Food Laboratory Opinion

In early January 2013, DRI conducted:

  • a search at the petitioner’s factory premises in Mumbai (04.01.2013), and
  • a panchnama at Kandla port (03.01.2013).

Samples were sent to the Central Food Laboratory (CFL), Pune. CFL opined:

  • the samples conformed to the parameters for palm kernel oil as per PFA / FSSR, but
  • to be fit for human consumption, the oil must undergo refining and should then conform to the standards for refined oil.

Thus, on all technical evidence, the oil was:

  • palm kernel oil of edible grade, but
  • not yet a refined edible oil ready for direct sale to consumers.

2.4 The Show Cause Notice and Earlier Interim Order

On 27.06.2013, the Additional Director General, DRI (respondent no. 2) issued a show cause notice alleging wrongful availment of exemption and demanding about ₹464 crores in customs duty and related levies, primarily on the ground that:

  • the imported CPKO, though “edible grade”, was not used to manufacture edible oil but used for industrial purposes, and
  • hence, the petitioners could not claim the benefit of Sr. No. 57 of Notif. 12/2012 (equivalent to Sr. No. 33A of Notif. 21/2002).

The petitioners invoked Article 226 of the Constitution, challenging the SCN as:

  • based on Circular No. 40/2001-Cus (which had already been quashed in Inter Continental (India) and that decision was affirmed by the Supreme Court), and
  • an attempt to reintroduce an end-use condition not found in the exemption notification.

In 2014, a Division Bench (Harsha Devani and Sonia Gokani JJ.) admitted the petition and granted interim relief, holding prima facie that:

  • the exemption notification did not impose any end‑use condition,
  • the goods clearly met the statutory definition of “edible grade”,
  • the SCN was without legal foundation, and
  • the writ petition was maintainable despite alternative remedy.

The present judgment (21.11.2025) finally adjudicates the merits and quashes the SCN.

3. Key Legal Issues

  1. Meaning of “edible grade” in Chapter 15 of the Customs Tariff and exemption notifications:
    • Does “edible grade” require that the oil be fit for immediate direct human consumption at the time of import?
    • Or is it sufficient that the oil meets the quality standards for edible oils prescribed under food law (PFA / FSSR), even if further refining is required?
  2. Relevance of end‑use:
    • Can customs authorities deny exemption under Notif. 21/2002-Cus (Sr. 33A) and Notif. 12/2012-Cus (Sr. 57) because the oil is used for industrial purposes and not ultimately for edible consumption, when the notification is silent on end‑use?
  3. Authority of CBEC circulars vis‑à‑vis notifications:
    • Can a Circular (notably 40/2001-Cus) add conditions to, or limit the scope of, a Section 25 exemption notification?
    • Is a SCN that effectively enforces a quashed circular jurisdictionally defective?
  4. Classification and rate of duty on CPKO:
    • Should CPKO of edible grade be assessed:
      • under the concessional entry “All goods, crude and edible grade” (Sr. 33A / 57), or
      • under the general tariff heading 1513 21 10 at 100% duty because it is not directly edible and used industrially?
  5. Maintainability of writ petition against a show cause notice:
    • Does the High Court’s jurisdiction under Article 226 extend to quashing an SCN where the assumption of jurisdiction is based on an ultra vires interpretation?

4. Summary of the Judgment

The Court’s principal holdings can be summarised as follows:

  • “Edible grade” is a quality standard, not an end‑use condition. Under Supplementary Note 1 to Chapter 15 of the Tariff Act, “edible grade” means conformity to the standards in Appendix B of the PFA Rules (or their FSSR equivalents). All test reports (Customs Chemical Examiner, Food Analyst, Port Health Officer, CFL Pune) confirmed that the imported CPKO met these standards. The fact that the oil needed further refining for human consumption does not deprive it of “edible grade” status.
  • End‑use (industrial vs edible) is irrelevant for Sr. 33A / Sr. 57. Exemption Notifications 21/2002-Cus (Sr. 33A) and 12/2012-Cus (Sr. 57) do not impose any end‑use condition. The DRI’s attempt to deny exemption based on industrial use amounts to reading an unwritten condition into the notification, which is impermissible in tax law.
  • Circular No. 40/2001-Cus cannot curtail the notification. That circular, which effectively required proof of ultimate edible use, had been quashed in Inter Continental (India) v. Union Of India and the Supreme Court had affirmed the High Court’s reasoning. The present SCN, being based on the same approach, is without jurisdiction.
  • CBEC Circular 29/97 and TRU clarifications support the petitioner’s interpretation. The Ministry itself had clarified that “vegetable oils of edible grade” covers:
    • oils fit for human consumption at import, and
    • oils that become fit after processing, as long as they are used for edible purposes.
    This underscores that “edible grade” is not confined to directly consumable oil.
  • Analogy with rice bran oil jurisprudence. Following Supreme Oil Industries Ltd (Calcutta High Court, affirmed by the Supreme Court) and Vishista Solvent Oils (Karnataka High Court), the Court recognised that:
    • oils classified as “edible” or “edible grade” in trade and in food law need not be directly consumable at the point of import, and
    • further processing/refining does not change their basic character as edible oils/edible-grade oils.
  • Writ petition maintainable; SCN quashed. Applying Whirlpool Corporation v. Registrar of Trade Marks, the Court held that where the SCN proceeds on an assumption of jurisdiction without legal foundation, Article 226 can be invoked despite an alternative remedy. The SCN was therefore quashed.

5. Detailed Analysis

5.1 Statutory and Notification Framework

5.1.1 Customs Act Provisions

  • Section 12, Customs Act, 1962 – creates the charge of customs duty on all goods imported into or exported from India, at rates specified in the Customs Tariff Act, 1975.
  • Sections 14 & 15 – deal with valuation and date of determination of rate of duty, i.e. quantification of the liability.
  • Section 25 – empowers the Central Government to grant:
    • general exemptions by notification (s. 25(1)), and
    • special, ad hoc exemptions by order (s. 25(2)).
    Notifications under s. 25(1) are delegated legislation.
  • Section 159 – requires that such notifications be laid before Parliament, underscoring their legislative character and implying that they cannot be amended or restricted by executive circulars.

5.1.2 Tariff Classification and “Edible Grade”

Chapter 15 of the Customs Tariff deals with animal or vegetable fats and oils. The crucial provision is Supplementary Note 1:

“In this Chapter, ‘edible grade’, in respect of goods (i.e., edible oil) specified in Appendix B to the Prevention of Food Adulteration Rules, 1955, means the standard of quality specified for such goods in that Appendix.”

Thus, “edible grade” is defined by reference to food law standards—specifically, Appendix B of the PFA Rules (now mirrored in FSSR 2011).

5.1.3 Exemption Notifications in Question

Notification No. 21/2002-Cus, Sr. No. 33A (inserted by Notif. 42/2008-Cus):

  • Chapters/Headings: 1508, 1509, 1510, 1512, 1513, 1514, 1515
  • Description: “All goods, crude and edible grade”
  • Rate: Nil

Notification No. 12/2012-Cus, Sr. No. 57 (successor to Sr. No. 33A):

  • Same chapters/headings and description: “All goods, crude and edible grade”
  • Initial rate: Nil; changed by Notification No. 2/2013-Cus to 2.5%.

Notably:

  • Sr. 33B of Notif. 21/2002-Cus provided 7.5% for “All goods, refined and edible grade”.
  • Wherever the Government intended to make exemption conditional on end-use, such conditions appear expressly in Column (6) of the notification and its conditions annexure.
  • Sr. No. 33A / 57 contains no such condition.

5.2 Court’s Construction of “Edible Grade”

The Court’s core reasoning is centered on what “edible grade” means in this legal matrix.

5.2.1 Link to PFA / FSSR Standards

Appendix B, PFA Rules, Entry A.17.21 defined “palm kernel oil” as oil obtained from palm kernels by expression or solvent extraction, with specified parameters (Butyro-refractometer reading, iodine value, saponification value, unsaponifiable matter, acid value, etc.). It added:

  • If obtained by solvent extraction, it must be supplied for human consumption only after refining and must meet standards for refined oils (A.17.15).

In FSSR 2011, these standards are reproduced in:

  • Regulation 2.2.1(21) – Palm kernel oil, and
  • Regulation 2.2.1(16) – Refined vegetable oil, listing permissible oils including palm kernel oil.

The laboratories consistently certified the petitioner’s imports as conforming to Reg. 2.2.1(21), i.e. meeting the palm kernel oil standard. Therefore, under Supplementary Note 1 to Chapter 15, they are “edible grade”.

5.2.2 Distinction Between “Edible Grade” and “Edible Oil”

A crucial conceptual distinction underlies the judgment:

  • “Edible grade”: denotes that the oil meets specified quality standards laid down for oils ultimately used for human consumption. It is a raw material quality standard.
  • “Edible oil”: denotes oil that is ready and permitted to be sold and consumed as food.

This distinction is reinforced by:

  • Rule 49(13), PFA Rules (and Reg. 2.3.14(10), FSSR):
    • “All edible oils, except coconut oil, olive oil, imported in crude, raw or unrefined form shall be subjected to the process of refining before sale for human consumption.”
  • Pulses, Edible Oilseeds and Edible Oils (Storage Control) Order, 1977, Section 2(g):
    • “Edible oil” means any oil used, directly or after processing, for human consumption.

Thus:

  • Crude edible‑grade oil may be not yet saleable or consumable as food, but it is still classified as “edible grade” because it is raw material capable of being made into edible oil.
  • The requirement of refining before sale for human consumption does not remove its status as “edible grade”.

The Court expressly notes that Notification Sr. 33A / 57 uses “crude and edible grade”, not “edible oil”. That wording is deliberate and broader.

5.3 Rejection of the End‑Use Condition and Circular-Based Interpretation

5.3.1 Circular 40/2001-Cus and Inter Continental (India)

Circular No. 40/2001-Cus (13.07.2001) purported to:

  • “explain” the meaning of “edible grade” and “edible oil” under an earlier exemption notification (17/2001-Cus), and
  • direct that concessional duty be granted only if imported oils were ultimately used for edible purposes, introducing an end‑use condition absent from the notification.

In Inter Continental (India) v. Union Of India, 2003 (154) ELT 37 (Guj.), the Gujarat High Court held:

  • Section 25 notifications are delegated legislation requiring gazette publication and Parliamentary scrutiny (s. 159).
  • A circular cannot add new conditions to or rewrite an exemption notification.
  • Imposing an end‑use condition by circular when the notification is silent is ultra vires.

The Supreme Court, in Union of India v. Inter Continental (India), 2008 (226) ELT 16 (SC), affirmed this view, holding that the Board could not, via a circular, restrict or whittle down the scope of the exemption.

5.3.2 Present SCN as a Re-enactment of the Discredited Approach

The DRI in this case tried to characterise the SCN as not “solely” based on Circular 40/2001 but also on “mis‑declaration” and technical reports. However, the Court found that:

  • the SCN’s logic was, in substance, that:
    • benefit of “crude and edible grade” is available only if the oil is used for edible purposes (after refining), and
    • since petitioners used it for industrial production (soap, fatty acids, etc.), exemption must be denied.
  • This is exactly the end‑use condition concept embedded in Circular 40/2001, which had been judicially nullified.

Consequently, the SCN was viewed as an attempt to reintroduce, through departmental action, a condition which the Court and the Supreme Court had already struck down. This undermined its jurisdictional legitimacy.

5.3.3 No Scope to Read Conditions Where None Exist

The Court reiterated long‑standing principles of interpretation of taxing and exemption provisions:

  • In a taxing statute, there is no room for intendment; one must look to the clear words of the provision.
  • If the taxpayer falls within the plain terms of the exemption, its benefit cannot be denied based on a supposed intention of the Government.
  • Once an assessee satisfies the eligibility criteria, exemption notifications are to be liberally construed; no additional conditions can be read in when none are expressed.

Applying these, the Court rejected the DRI’s argument that the “public interest” rationale of granting cheaper edible oils for consumers should inform interpretation. Public interest can guide the issuance of notifications (s. 25(1)), but cannot justify judicially adding end‑use requirements not present in the text.

5.4 Precedents and Clarifications Relied Upon

5.4.1 Inter Continental (India) v. Union Of India (Gujarat HC) and Supreme Court Affirmation

As already noted, Inter Continental is the direct prior authority on:

  • the invalidity of Circular 40/2001-Cus, and
  • the principle that circulars cannot modify or add conditions to Section 25 notifications.

VVF India’s case applies this reasoning to a new factual context (CPKO edible grade) but the legal issues are substantially identical. The Gujarat High Court correctly treats Inter Continental and its Supreme Court affirmation as binding precedent that directly governs the controversy.

5.4.2 Whirlpool Corporation v. Registrar of Trade Marks

On the issue of writ maintainability against an SCN, the Court relies on Whirlpool Corporation v. Registrar of Trade Marks, (1998) 8 SCC 1, which recognises that:

  • the existence of an alternative remedy does not bar a writ petition where:
    • the authority has no jurisdiction,
    • there is a violation of fundamental rights, or
    • the proceedings are wholly without legal foundation.

Here, because the SCN was fundamentally premised on an ultra vires interpretation (attempting to reinsert a quashed condition), the Court held that Article 226 jurisdiction was properly invoked.

5.4.3 Union of India v. Guwahati Carbon Ltd.

Revenue relied on this decision to argue that writ petitions against SCNs should generally not be entertained. The Court correctly distinguished it, noting:

  • Guwahati Carbon does not lay down an absolute bar to writs against SCNs,
  • each case must be examined on its own facts, and
  • where jurisdictional error is shown, writ jurisdiction remains available.

5.4.4 Rice Bran Oil Cases: Supreme Oil Industries Ltd and Vishista Solvent Oils

The Court draws persuasive support from rice bran oil jurisprudence:

  1. Supreme Oil Industries Ltd v. Special Secretary, Finance (Calcutta High Court, 2007; affirmed in Commissioner of Commercial Taxes v. Supreme Oil Industries Ltd, SC, 29.04.2009):
    • Concerned an incentive scheme referring to “Edible Rice Bran Oil”.
    • There are three categories:
      • Refined grade – directly edible,
      • Raw Grade I – edible variety, needs further processing, used by vanaspati industry,
      • Raw Grade II – non‑edible, used for industrial purposes.
    • The Court held that Raw Grade I, though requiring further processing, is still ‘edible oil’ for the purpose of the scheme.
    • The Supreme Court, affirming this, emphasised that the object of the scheme was to support units producing Raw Grade I and that trade and food law recognised it as edible oil.
  2. Vishista Solvent Oils Pvt. Ltd. v. DCCT (Karnataka HC, (2001) 121 STC 492):
    • Held that “edible oil” in common and trade parlance includes both refined and non‑refined oil, including solvent extracted oils.
    • Refining removes impurities but does not change the basic character of the oil.
    • Solvent extracted oil, although not saleable for direct human consumption until refined, still falls under the category of edible oil.

By analogy, the Gujarat High Court concludes that:

  • CPKO conforming to edible standards (Reg. 2.2.1(21)) remains “edible grade” even if further refining is mandated before consumer sale.
  • The need for refining does not declassify it as edible grade.

5.4.5 CBEC Circular 29/97-Cus and TRU Clarification on Rice Bran Oil

Circular No. 29/97-Cus (31.07.1997) clarified the phrase “vegetable oils of edible grade” appearing in Notif. 11/1997-Cus:

The term “vegetable oils of edible grade” will cover:
  • vegetable oils fit for human consumption at the time of import, and
  • vegetable oils which are fit for human consumption after further processing.
Benefit of duty exemption is admissible so long as the imported oil is used for edible purposes, even after refining.

Similarly, TRU’s 1987 clarification on rice bran oil explained that:

  • “Rice bran oil of edible grade” refers to oil conforming to the edible oil quality standards,
  • even though it may require further refining, and
  • the distinction is between oil fit for refining for edible/vanaspati use and oil usable only for industrial purposes.

The High Court uses these clarifications to reinforce that the expression “edible grade” in customs notifications is quality‑oriented, not use‑oriented.

5.5 Role of Technical Reports and Food Law

The DRI sought to rely on CFL and Food Analyst reports that the CPKO could be used for human consumption only after refining, to argue that:

  • the oil was not edible grade at import, or
  • it was misdeclared as edible grade.

The Court rejects this approach for two reasons:

  1. The reports support, rather than undermine, “edible grade” classification. Every technical report clearly states that the oil meets the standards for palm kernel oil under PFA/FSSR (i.e. Reg. 2.2.1(21)). Under Supplementary Note 1, this is precisely what “edible grade” means. The additional remark that it requires refining for direct consumption simply reflects the distinction between raw edible-grade oil and refined edible oil, not a denial of edible-grade status.
  2. Misdeclaration cannot be inferred from end-use. Classification and eligibility for exemption depend on the inherent nature and quality of the goods at the time of import, not on subsequent use. The petitioner correctly described the goods as “Crude Palm Kernel Oil (Edible Grade)” according to the test reports and statutory standards. The industrial use is irrelevant to the correctness of the description.

5.6 Writ Maintainability and Jurisdictional Error

The Revenue argued that the petitioners should have responded to the SCN, availed the adjudication process and appeals, and that the writ was premature. The Court disagreed, holding:

  • The SCN rested on a patently unsustainable legal premise: that an end‑use condition (edible purpose) is implicit in Sr. 33A / 57, despite the contrary precedent in Inter Continental.
  • By proceeding on this basis, the DRI had usurped jurisdiction without legal foundation.
  • Requiring the petitioner to undergo a “lengthy proceeding and undue harassment” would be unjustified when the very assumption of jurisdiction is flawed.

In line with Whirlpool, the High Court thus exercised its plenary jurisdiction under Article 226 to quash the SCN itself.

5.7 Interpretation Principles for Exemption Notifications

The judgment reflects a careful balance among the following interpretative rules:

  • Strict construction of taxing statutes:
    • No tax can be imposed without clear words in the statute.
  • Exemption eligibility must be clearly established:
    • The assessee bears the burden of showing that it falls within the notification’s terms.
    • Here, the petitioners showed that the goods:
      • fall under the specified headings (CTH 1513), and
      • are “crude and edible grade” per PFA/FSSR standards.
  • Once eligibility is established, exemptions are construed liberally:
    • No new conditions (such as end‑use) may be read into the notification.
    • The Court must not “call in aid any supposed intention of the exempting authority” to cut down clear textual coverage.

The Court adheres to these principles by:

  • acknowledging that “crude palm kernel oil edible grade” squarely fits Sr. 33A / 57, and
  • refusing to graft an unexpressed end‑use limitation onto the phrase “crude and edible grade”.

5.8 Impact and Implications

5.8.1 For Importers of Edible-Grade Oils

This decision gives substantial clarity and comfort to importers of:

  • crude edible-grade palm oils,
  • other vegetable oils covered by Chapter 15, and
  • similar oils used as raw materials in non-food industries (soaps, detergents, oleochemicals, etc.).

Key takeaways for such importers:

  • If the oil:
    • is covered by the specified tariff headings, and
    • meets the edible-grade standards under PFA/FSSR,
    exemption cannot be denied merely because:
    • the oil is not immediately edible at import, or
    • it is used in industrial manufacture rather than as food.
  • The Department cannot demand end-use certificates or insist that the goods be used exclusively for edible purposes unless the notification itself so provides.

5.8.2 For Revenue and Administrative Practice

For the customs administration and DRI, the ruling:

  • reaffirms that:
    • circulars are only interpretative and cannot alter the scope of legislative notifications, and
    • departments must align practices with Inter Continental and VVF India, abandoning reliance on the discredited logic of Circular 40/2001.
  • limits the scope for using end-use based denials in cases of edible-grade oils where the exemption entry is silent on end-use.
  • signals that SCNs founded on ultra vires legal premises are vulnerable to early judicial intervention.

5.8.3 Doctrinal Significance

The judgment strengthens and extends three doctrinal strands:

  1. Supremacy of Section 25 notifications over circulars:
    • Confirms that Section 25 notifications, as a form of delegated legislation, cannot be restricted or re‑written by Board circulars.
  2. Integration of food law standards into customs classification:
    • Reiterates that Chapter 15 classifications and exemptions are closely linked to PFA/FSSR standards via Supplementary Note 1.
    • This promotes coherence between customs and food safety regulation.
  3. Recognition of jurisdictional error at the SCN stage:
    • Confirms that where an SCN is premised on a legal interpretation already rejected by higher courts, it can be treated as jurisdictionally incompetent and quashed under Article 226.

6. Complex Concepts Simplified

6.1 Crude vs Refined Oil

  • Crude oil: the initial oil extracted from seeds/nuts/kernels by pressing or solvent extraction. It contains impurities and, if solvent-extracted, residual solvent (e.g., hexane).
  • Refined oil: crude oil that has undergone processes like neutralisation, bleaching, deodorisation and removal of solvent, making it:
    • stable,
    • palatable, and
    • safe for direct human consumption.

6.2 “Edible Grade” vs “Edible Oil”

  • Edible grade:
    • Means the oil conforms to the quality standards laid down for edible oils (PFA/FSSR Appendix B standards).
    • May still require refining before it can be sold or consumed as food.
  • Edible oil:
    • Oil actually ready and permitted to be consumed as food.
    • Usually refined and satisfying additional conditions (e.g., limits on solvent residue, flash point).

6.3 Exemption Notification

A notification issued under Section 25(1) of the Customs Act that reduces or eliminates customs duty on specified goods, often to meet:

  • policy objectives (e.g., cheaper food imports), or
  • industrial or economic goals.

It is a form of subordinate legislation and must be interpreted using legislative interpretation principles.

6.4 CBEC Circular

An administrative instruction issued by the Central Board of Excise and Customs (now CBIC) to provide uniform guidance to field formations. Legally:

  • It can clarify how to implement statutes or notifications, but
  • Cannot add new substantive conditions or override statutory provisions or notifications.

6.5 End-Use Condition

A requirement that concessional duty or exemption depends on how the imported goods are ultimately used (e.g., “for manufacture of x only”, “for medicinal use”, etc.).

Such a condition is valid only if it is:

  • explicitly stated in the notification and
  • enforceable with appropriate safeguards (e.g., bonds, certificates).

6.6 Writ Against Show Cause Notice

Generally, High Courts avoid interfering at the SCN stage, but will do so where:

  • the notice discloses no offence or contravention, or
  • is issued by an authority lacking jurisdiction, or
  • is based on a patently erroneous or ultra vires legal premise.

7. Conclusion: Significance of VVF India Ltd v. Union of India

The Gujarat High Court’s decision in VVF India Ltd v. Union of India consolidates and extends a critical line of authority on customs exemptions for edible-grade oils. It holds, in effect, that:

  1. “Edible grade” in customs law is tethered to food law standards (PFA/FSSR) and not to the ultimate use of the oil.
  2. End-use cannot be smuggled into exemption entries where the notification does not expressly so provide.
  3. CBEC circulars cannot rewrite, restrict, or add conditions to Section 25 notifications; Circular 40/2001’s approach remains legally void, and attempts to revive it through SCNs are jurisdictionally flawed.
  4. Crude palm kernel oil that meets edible-grade standards remains eligible for concessional duty under Sr. 33A / Sr. 57, even if:
    • it is not directly consumable at import, and
    • it is used in industrial manufacture rather than as food.
  5. High Courts retain the power and duty to quash SCNs that proceed on such ultra vires assumptions, notwithstanding alternative statutory remedies.

In the broader legal context, this judgment enhances certainty in the classification and taxation of edible-grade oils, ensures respect for the limits of administrative power, and promotes coherence between customs law and food safety regulation. For both revenue and industry, it offers a clear, principle-based roadmap on how the expression “crude and edible grade” must be understood and applied.

Case Details

Year: 2025
Court: Gujarat High Court

Judge(s)

HONOURABLE MR. JUSTICE PRANAV TRIVEDI

Advocates

NANAVATI ASSOCIATES(1375) MR ANKIT SHAH(6371)

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