Tribunal denies duty exemption for Mono-Ammonium Phosphate in complex fertilizers

COROMANDEL FERTILIZERS LTD. Versus COLLECTOR OF CUSTOMS, MADRAS

COROMANDEL FERTILIZERS LTD. Versus COLLECTOR OF CUSTOMS, MADRAS - 1985 (21) E.L.T. 120 (Tribunal) Issues Involved:

1. Eligibility for duty exemption under Notification No. 178/76 for Mono-Ammonium Phosphate (MAP) imported for use in the production of complex fertilizers.
2. Interpretation of the term "Ammonium phosphate" in Notification No. 178/76.
3. Applicability of the principle of contemporanea expositio.
4. Alleged discrimination in the application of the exemption notification.
5. Relevance of the Gujarat High Court decision in the GSFC case to the present case.

Issue-wise Detailed Analysis:

1. Eligibility for Duty Exemption under Notification No. 178/76:

The appellants imported MAP for use in the production of complex fertilizers and sought exemption from customs duty under Notification No. 178/76. The notification exempted ammonium phosphate imported for use as manure from the whole of customs duty. The Assistant Collector initially allowed clearance of the consignment on payment of reduced auxiliary duty and additional countervailing duty, with the condition that the appellants produce a clarification from the Ministry of Finance confirming the applicability of the exemption. The Ministry did not respond, and the Assistant Collector later issued a notice demanding the differential duty, which was upheld by the Collector of Customs (Appeals).

The Tribunal concluded that Notification No. 178/76 did not exempt MAP imported for use in the production of complex fertilizers, as it specifically required the imported substance to be used as manure. The subsequent issuance of Notification No. 164/80, which extended the exemption to MAP used in the production of complex fertilizers, supported this interpretation.

2. Interpretation of the Term "Ammonium Phosphate":

The appellants argued that the term "ammonium phosphate" in Notification No. 178/76 was generic and covered both mono and di-ammonium phosphates. The Departmental Representative agreed with this interpretation, and the Tribunal found it self-evident, given that the sub-heading in the Customs Tariff Schedule specified both mono-ammonium and di-ammonium phosphates.

3. Applicability of the Principle of Contemporanea Expositio:

The appellants contended that the principle of contemporanea expositio, which requires the construction of a notification in accordance with contemporary understanding, supported their case. They argued that Customs authorities at other ports were allowing clearances of imported MAP free of duty under Notification No. 178/76. However, the Tribunal found that the principle did not help the appellants, as the exchange of correspondence and the issuance of Notification No. 164/80 indicated that there were erroneous assessments, and those erroneous assessments would not constitute the basis for a correct interpretation of Notification No. 178/76.

4. Alleged Discrimination in the Application of the Exemption Notification:

The appellants claimed that denying them the benefit of the notification while extending it to other fertilizer manufacturers amounted to injustice and discrimination. The Tribunal found that the Customs authorities had raised objections to similar imports by Rashtrya Chemicals & Fertilizers, leading to the issuance of Notification No. 164/80. This indicated that the benefit was not uniformly extended to other importers, and the appellants were not entitled to the benefit of an erroneous assessment.

5. Relevance of the Gujarat High Court Decision in the GSFC Case:

The appellants relied on the Gujarat High Court decision in the GSFC case, where rock phosphate imported in pebbles and later mechanically converted into powder form was held to fall within the ambit of the relevant tariff item. The Tribunal found that the decision was based on the specific facts of that case and did not apply to the present case. The issue in the GSFC case was whether the form of the imported substance indicated its use for manurial purposes, whereas the issue in the present case was whether the exemption applied to MAP imported for use in the production of complex fertilizers.

Conclusion:

The Tribunal concluded that the appellants were not entitled to the duty exemption under Notification No. 178/76 for the imported MAP used in the production of complex fertilizers. The appeal was rejected.