Circular No. 281/115/96-CX.3
dated 26/12/96
Subject:- CE - Eligibility of Cardenol for exemption under notification No.
115/75-CE dated:30.4.75-Clarification
2. During the cashew processing operations, the industry recovers Cashewnut Shell
Liquid (CNSL) containing parts of cashew shells and certain other contaminants/organic
impurities. Some units take the cashewnut shell liquid and purify it by distillation.
The purified CNSL is commercially known as "Cardenol".
3. The matter has been examined. The Board has taken note of the following facts:
(i) The process to obtain "Cardenol" from Cashew Nut Shell Liquid (CNSL) is
necessarily one of purification and not "manufacture".
(ii) On a reference from the office of DG(AE), Cochin Regional Unit, the Cashew
Export Promotion Council of India vide their letter dated 20.12.1995 clarified
that cardenol manufacturers are also enrolled as members of the Council and
registered as Registered Exporters as cardenol is a product of Cashew Industry.
(iii) The Indian Institute of Chemical Technology, Hyderabad on the basis of chemical
tests of samples of CNSL and Cardenol has opined that IR spectra of both the
samples are super imposable which means there is no difference in the structure
between the two.
(iv) The Chemical Examiner, Customs Laboratory, Madras has expressed the view that
cardenol cannot be considered as vegetable fat polymerised by heat in vacuum or
otherwise chemically modified.
(v) The Chief Chemist, CRCL, New Delhi has expressed the view that in view of the
composition and derivation of Cardenol, there are grounds to consider this
product manufactured in factories covered by Cashew Industry.
4. Therefore, the process to obtain "Cardenol" from CNSL is necessarily one of
purification/distillation and after distillation, the basic composition as well as the
molecular structure of CNSL do not undergo any transformation. The Board has also
taken note of the judgements of CEGAT in the case of SD Fine Chem. Pvt. Ltd. [1991
(56) ELT 393 T] and Anil Chemicals Ltd. [1985 (21) ELT 889] wherein it has been held
that the process of purification by distillation does not amount to "manufacture"
within the meaning of section 2(f) of the Central Excise Act, 1944. In view of the
above it is felt that since CNSL is a product of "Cashew Industry", Cardenol, which is
a purified form of CNSL, would continue to be product of "Cashew Industry".
5. Therefore, it is clarified that Cardenol is a product of "Cashew Industry" and
accordingly exempt from Central Excise duty in terms of notification No. 115/75-CH
dated 30.4.75.
6. All pending disputes/assessments on the issue may be settled in the light of
these guidelines.
Sd/-
(P.K.Sinha)
Under Secretary to the Government of India
F.No. 94/1/96-CX.3
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