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Supreme Court: Crude Soybean Oil Is a Manufactured Product, Not Agricultural Produce—Qualifies for Customs Duty Exemption

In a significant ruling impacting trade and customs classification, the Supreme Court has held that crude degummed soybean oil is a manufactured product and does not retain the character of agricultural produce. This decision has implications for the interpretation of customs duty exemptions under relevant trade laws.

The judgment came in the case of Noble Resources and a Trading India Private Limited (Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors., where the petitioners challenged the denial of customs duty exemption for crude soybean oil on the ground that it should be treated as agricultural produce.

A bench comprising Justices Abhay S. Oka and Ujjal Bhuyan rejected the Gujarat High Court’s earlier view that the oil retains its agricultural nature. The Supreme Court observed:

“Crude degummed soybean oil undergoes a manufacturing process that alters its essential character, distinguishing it from raw soybeans. The fact that it is derived from an agricultural product does not, by itself, render it agricultural produce.”

The Court clarified that the extraction and processing of oil from soybeans constitute manufacturing, thereby disqualifying the product from the classification of agricultural produce under customs law. Further, it dismissed the argument that the product should still be considered agricultural merely because it requires additional refining before consumption.

This judgment is expected to influence how processed goods of agricultural origin are classified for taxation and trade purposes, especially in disputes involving tariff benefits or exemptions under various trade agreements and notifications.

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