The Hindu Business Line : Govt clamps excise duty on interesterified oil

The Government had, with effect from April 30, 2003, levied a specific excise duty of Rs 1.25 per kg on vanaspati and bakery shortening, falling under excise tariff head 15.04 (B). On the other hand, interesterified fats, clubbed under 15.04 (A) as "all goods", were exempt from the levy.

But as per the latest notification from the Department of Revenue, dated December 31, interesterified fats will also henceforth attract the Rs 1.25 per kg duty. "The move would remove an anomaly, which arises from the fact that interesterified fat is basically a variant of vanaspati and can be used as a substitute", officials said.

Vanaspati is essentially hydrogenated vegetable oil, the manufacturing process of which involves addition of hydrogen to any edible oil using a catalyst to produce a fat with semi-solid, granular consistency mimicking desi ghee. Interesterification, on the other hand, involves re-arrangement of the fatty acids in relation to their position of the triglyceride molecules of the edible oil in the presence of a catalyst. The re-arrangement brings about changes in the melting and crystallisation properties of the oil and the resultant product is creamy and semi-solid like vanaspati.

But unlike vanaspati, the interesterified oil is considered healthier, since it has a lower content of `unhealthy' (saturated fatty acids and trans fatty acids) and higher levels of `healthy' fats (polyunsaturated fatty acids or PUFA).

In fact, only in April 2000, Hindustan Lever Ltd (HLL) had made a high profile launch of an interesterified fat under the brand of New Dalda Activ. The new product was touted as offering the taste and aroma benefits of vanaspati in a `healthier way'. Further, the interesterified fat, unlike vanaspati, did not congeal on cooling, making it more consumer appealing.

However, following the takeover of HLL's edible oil business by Bunge, the latter has recently taken New Dalda Activ off the consumer shelves.

While the withdrawal was apparently linked to the Government's refusal to permit use of certain chemical additives in the interesterification process, the real reason though is said to have been the poor market response to the product — something that has also discouraged other players, such as Rath, Gagan, Ruchi and Liberty Oils, from taking the plunge.

And now with the Finance Ministry clamping Rs 1.25 per kg excise duty on interesterified fats, they have an additional justification.

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