1997(12)LCX0242
IN THE CEGAT, COURT NO. III, NEW DELHI
Shri S.K. Bhatnagar, Vice President and Ms. Jyoti Balasundaram, Member (J)
COLLECTOR OF C. EX., CHANDIGARH
Versus
INDIA PHOSPHATE & CARBONATE
Final Order No. 631/97-C, dated 15-12-1997 in Appeal No. E/3237/91-C
Cases Quoted
Punjab Micro Nutrients Pvt. Ltd. v. Collector — 1990(04)LCX0071 Eq 1990 (048) ELT 0603 (Tribunal) — Relied on [Paras 2, 4, 10]
Ranadey Micro Nutrients v. Collector — 1996(09)LCX0009 Eq 1996 (087) ELT 0019 (S.C.) — Relied on [Para 5]
Radhika Vitamalt Pvt. Ltd. v. Collector — 1985(04)LCX0042 Eq 1985 (021) ELT 0920 (Tribunal) — Relied on [Para 7]
Advocated By : Shri J.M. Sharma, JDR, for the Appellant.
Shri N.K. Garg, Advocate, for the Respondent.
[Order per : S.K. Bhatnagar, Vice President]. - This is an appeal filed by the department against the order of Collector (A), Chandigarh dated 29-5-1991.
2. Ld. DR drew attention to the impugned order on the grounds of appeal and reiterated the department’s view as contained therein. He stated that the respondents were engaged in the manufacture of zinc sulphate. During the period 1-3-1986 to 4-8-1986, they brought sulphuric acid under Notification No. 81/75 and NIL rate of duty and used the same in the manufacture of zinc sulphate. Notification No. 81/75 provided exemption from central excise duty to sulphuric acid if the same was used in the manufacture of fertilisers. Since w.e.f. 1-3-1986 i.e. with the coming into effect of Central Excise Tariff Act, 1985, fertilisers were covered under Chapter 31 and zinc sulphate not having nitrogen, phosphorus or potassium as one of its constituent elements, the same was not a fertiliser, it appeared that benefit of Notification 81/75 amended vide Notification No. 78/86 was not admissible to the party. Accordingly the A.C. confirmed the demand but the Collector accepted the appeal and set aside the order of the A.C. relying upon the judgment in the case of M/s. Punjab Micro Nutrients Pvt. Ltd.
3. It was the department’s contention that the appellate authority has erred in granting relief to the appellants and allowing exemption in terms of Notification No. 81/75 as amended and treating zinc sulphate as a fertiliser. It was incorrect to hold that the zinc sulphate was a fertiliser under Chapter 31 and in view of that it ought to have been held that sulphuric acid was not used in the manufacture of fertiliser. He further stated that it is to be appreciated that in terms of the chapter and section notes Micronutrients are not classifiable as fertiliser and the legislature had recognised only specific items as fertilisers classifiable under Chapter 31. The Micronutrients, such as zinc sulphate do not have any of the specified ingredients or composition that would entitle them to be classified as fertiliser. A fertiliser must contain at least one of the essential fertilising elements i.e. nitrogen, phosphorus, and potassium and since zinc sulphate does not contain any of these essential elements, it could not be termed as fertiliser. Since Micronutrients are not fertilisers, the benefit under Notification No. 81/75 should not have been allowed.
4. Ld. Counsel stated that the department’s contention is erroneous. The zinc sulphate is also one of the well known fertilisers which is used as micronutrient and therefore the Collector was right in allowing their appeal. In this connection he would draw attention to the Tribunal’s decision in the case of Punjab Micro Nutrients reported in 1990(04)LCX0071 Eq 1990 (048) ELT 0603 (Tribunal) = 1990 (030) ECR 134 in which it was held that the zinc sulphate can be considered as a fertiliser being a micronutrient bearing product and exemption Notification 81/75-C.E. covered the sulphuric acid used in the manufacture of zinc sulphate as the latter is used as a fertiliser.
5. He would also like to draw attention in this connection to Supreme Court judgment in the case of Ranadey Micro Nutrients - 1996(09)LCX0009 Eq 1996 (087) ELT 0019 (S.C.).
6. We have considered the above submissions. We observe that ld. Counsel’s contentions have strong force. In this case admittedly the respondents brought sulphuric acid under Notification 81/75 at NIL rate of duty and used the same in the manufacture of zinc sulphate. This Notification grants exemption to sulphuric acid if the same was used in the manufacture of fertilisers.
7. While it is true that in respect of fertilisers covered by Chapter 31, the Chapter Note 6 mentions that “For the purposes of Heading No. 31.05, the term `other fertilisers’ applies only to products of a kind used as fertilisers and containing, as an essential constituent, at least one of the fertilising elements nitrogen, phosphorus or potassium.” At the same time it cannot be denied that zinc sulphate by itself is also utilised as fertiliser in agriculture and is in the nature of micronutrient meant for growth of plants and the Hon’ble Supreme Court has held it to be classifiable under Heading 31.05 as “Other Fertiliser” in terms of the Board’s circular dated 21-11-1994 issued by the CBEC (withdrawing earlier circular dated 20-6-1990). Prima facie this circular does not appear to be in consonance with the provisions of chapter Note 6 of Chapter 31 but the Hon’ble Supreme Court has noted its binding character and held that the department cannot repudiate it on the ground that it is inconsistent with a statutory provision; and the idea appears to be that the citizen must not be allowed to suffer in these circumstances. Therefore, at least till it is not withdrawn it will have to be taken into account in terms of Supreme Court’s order. It is noteworthy that in this circular the CBEC has mentioned inter alia as follows :
“4. Therefore, it is clarified that micronutrient listed under Sr. No. 1(F) of Schedule 1 Part (A) of the Fertiliser Control Order, 1985 and their mixture (with or without N.P.K.) as notified by the Central Government or a State Government would be appropriately classifiable under heading No. 31.05 as ”Other Fertilisers".
Furthermore for the purpose of our present case what is important is the language of exemption Notification No. 81/75 which grants exemption to sulphuric acid falling under sub-heading No. 2802.20 intended for use in the manufacture of fertilisers from the whole of the duty leviable thereon provided that the A.C. is satisfied that the said sulphuric acid has been so used and Chapter X procedure is followed. Therefore, it is immaterial for the purpose of this notification as to in which heading the zinc sulphate was classifiable. What is more important is whether it is used as a fertiliser. The Tribunal has in its aforesaid order referred to an earlier decision of the Tribunal in the case of M/s. Radhika Vitamalt Pvt. Ltd. - 1985(04)LCX0042 Eq 1985 (021) ELT 0920 (Tribunal) = 1985 (005) ECR 2109 and mentioned that in that decision the Tribunal had considered whether zinc sulphate was a fertiliser or not. It had also considered the aspect of distinction between nitrogen, phosphorus and potassium containing fertilisers (major fertilisers) and micronutrients. The Tribunal had observed inter alia that micro- nutrients are a group of nutrients which are essential for plant growth and development but are required by plants in small quantities and zinc amongst others falls in this category. Further it is also seen that in the Hand Book on Fertiliser Usage brought out by the Fertiliser Association of India shows zinc etc. which are required by plant in small quantities for their growth and development are referred to as micronutrients or trace elements. The Tribunal had also occasion to consider the ISI Glossary of Terms and Other Technical Works to come to conclusion that zinc sulphate can be considered as fertiliser, besides noting the inclusion thereof in the Fertiliser Control Order.
8. The CBEC circular mentioned in the judgment of the Supreme Court also refers to the Fertiliser Control Order.
9. Moreover we are concerned only with the use of zinc sulphate as a fertiliser (and not with its composition in term of Chapter Note 6 or otherwise) for the purpose of this notification.
10. We consider that the ratio of the Tribunal’s order in the case of Punjab Micro Nutrients (supra) squarely covers the present case. Therefore, there is no reason to interfere with the order of the Collector (A) that the appellants had rightly availed the benefit of the notification. The appeal is therefore rejected.
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Equivalent 1998 (98) ELT 634 (Tribunal)