1/5/2005 BUSINESS LINE New Delhi - The Finance Ministry has clamped anexcise duty of Rs 1.25 per kg on interesterified fats on par with thatcurrently charged on vanaspati.

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

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

Vanaspati is essentially hydrogenated vegetable oil, the manufacturingprocess of which involves addition of hydrogen to any edible oil using acatalyst to produce a fat with semi-solid, granular consistency mimickingdesi ghee. Interesterification, on the other hand, involves re-arrangementof the fatty acids in relation to their position of the triglyceridemolecules of the edible oil in the presence of a catalyst. There-arrangement brings about changes in the melting and crystallisationproperties of the oil and the resultant product is creamy and semi-solidlike vanaspati.

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

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

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

While the withdrawal was apparently linked to the Government's refusal topermit use of certain chemical additives in the interesterificationprocess, the real reason though is said to have been the poor marketresponse to the product - something that has also discouraged otherplayers, such as Rath, Gagan, Ruchi and Liberty Oils, from taking theplunge.

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