2016 (4) TMI 1190 - AT - Customs

Tribunal affirms exemption for essential goods in fertilizer plant under customs notification

The Tribunal upheld the decision of the first appellate authority, affirming the eligibility of the respondent for the benefit of exemption under ... N/N. 66/94-Cus., dated 1-3-1994 - import of Steam Geared Turbine Alternator - denial on the ground that the said certificate is signed by Dy. Advisor in the Ministry of Fertiliser and it was not clear whether the Dy. Advisor is an officer not below the rank of Dy. Secretary - Held that: - the Revenue’s claim that the imported goods are used for sulphuric acid plant and it is not a fertiliser plant. Such a submission is totally misdirected as it is common knowledge that for manufacture of fertilizer sulphuric acid is one of the prime raw material and is cost effective if produced within the plant wherein fertilizer is manufactured. It is not disputed that sulphuric acid plant is within the fertilizer plant of the respondent - Accordingly the benefit of N/N. 66/94-Cus. cannot be denied - appeal rejected - decided against Revenue. Issues:Extension of benefit of exemption under Notification No. 66/94-Cus. for the import of Steam Geared Turbine Alternator.Detailed Analysis:1. Issue of Benefit of Exemption: The case involved the extension of the benefit of exemption from duty under Notification No. 66/94-Cus. for the import of Steam Geared Turbine Alternator. The respondents claimed the exemption for items imported as part of renovation/modernization of fertilizer plants and provided a certificate from an officer certifying the necessity of the imported goods. The adjudicating authority rejected the exemption based on the rank of the certifying officer. However, the first appellate authority accepted the clarification that the certifying officer was equivalent to the rank required by the notification. The Tribunal upheld this decision, emphasizing the importance of the clarification provided by the Ministry of Fertiliser.2. Dispute Over Applicability of Notification: The Revenue contended that the goods were for a sulphuric acid plant, not a fertilizer plant, and thus, the exemption under Notification Nos. 90/94-Cus. and 91/94-Cus. did not apply. However, the Tribunal found this argument lacking merit. It clarified that the production of sulphuric acid is essential for manufacturing fertilizer, and since the sulphuric acid plant was within the fertilizer plant of the respondent, the benefit of Notification No. 66/94-Cus. could not be denied. The Tribunal highlighted that the Revenue's claim was misdirected, as the production of sulphuric acid within the fertilizer plant is cost-effective.3. Precedents and Circulars: The Tribunal referred to a similar case involving Indian Farmers Fertilizers Co-Operative Ltd., where the Bench ruled in favor of the assessee. Additionally, the Tribunal cited Circular No. 18/96-Cus., which clarified that a fertilizer plant includes units producing intermediate products for captive consumption, not just the unit where the finished end-product is manufactured. These precedents and circulars supported the Tribunal's decision to reject the Revenue's appeal, emphasizing the correct interpretation of the exemption notification.In conclusion, the Tribunal found the appeal filed by the Revenue to be devoid of merits and rejected it, affirming the eligibility of the respondent for the benefit of the exemption under Notification No. 66/94-Cus. The decision was based on a thorough analysis of the facts, legal provisions, precedents, and clarifications provided by the Ministry of Fertiliser.