Step 1: Examine Statement (I).
The CFTRI (Central Food Technological Research Institute) process for pulse milling conditions the pulse using only water sprinkling and a controlled heat and drying cycle before dehusking, this replaces the traditional practice of smearing the grain with a thin coating of edible oil to loosen the husk. Because the CFTRI method genuinely does away with the oil-conditioning step, Statement (I) is correct.
Step 2: Examine Statement (II).
Wet milling requires soaking the pulse in water for an extended period before dehusking, this prolonged soaking leaches out some of the pulse's natural water-soluble flavour compounds and can allow mild microbial fermentation to set in, both of which subtly change the taste. Dry milling skips this long soaking step entirely, so it preserves the pulse's natural flavour more closely, which is why dry-milled dhal is generally reported to have a better taste than wet-milled dhal.
Step 3: Combine the findings.
Since the CFTRI method truly removes the need for oil conditioning and dry milling genuinely tends to protect flavour better than wet milling, both statements hold, giving the answer that both Statement (I) and Statement (II) are correct.
\[ \boxed{Both Statement (I) and Statement (II) are correct.} \]