Agricultural grade classification for zinc sulphate upheld where laboratory and documentary evidence satisfied the exemption standard.

Laboratory testing and surrounding documentary evidence established that the zinc sulphate cleared by the assessee conformed to the prescribed Indian Standard for agricultural grade zinc sulphate heptahydrate. The revenue laboratory reported compliance with the specification and zinc content above the minimum required for agricultural grade, while supporting records showed the goods were described as ISI-mark agricultural grade material and sold to agricultural co-operatives and farmers' co-operatives. On that total evidence, the contrary classification in the adjudication order could not stand, and the goods qualified for exemption under Notification No. 40/85.

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Issues: Whether the goods manufactured and cleared as zinc sulphate were agricultural grade and therefore exempt under Notification No. 40/85.

Analysis: The product was tested against the relevant Indian Standard for zinc sulphate heptahydrate, agricultural grade. The revenue laboratory reported that the samples conformed to the prescribed specification and recorded zinc content above the minimum required for agricultural grade. The record also contained supporting test reports from agricultural authorities, purchase orders describing the goods as ISI-mark agricultural grade material, and evidence of sale to agricultural co-operatives and farmers' co-operatives. On the totality of this evidence, the contrary finding in the adjudication order was unsustainable.

Conclusion: The goods were agricultural grade zinc sulphate and the assessee was entitled to the exemption under Notification No. 40/85.

Ratio Decidendi: Where laboratory reports and surrounding documentary evidence establish that the product satisfies the prescribed standard for an exempt agricultural grade commodity, duty demand and penalties cannot be sustained on a contrary unsupported classification.

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