1980 (1) TMI 89 - HC - Customs

Rock phosphate pebbles deemed as chemical fertilizers for manurial use under Customs Tariff

The court classified rock phosphate in pebble form under Entry 35 of the Customs Tariff, emphasizing that the material need not be immediately fit for use ... Trade Notice - Binding effect - `In a form indicative' - Connotation of - Rock phosphate - `Form' Issues Involved:1. Classification of rock phosphate in pebble form under Customs Tariff.2. Interpretation of Entry 35 and Entry 87 of the Customs Tariff.3. Refund of duty paid under protest.Issue-wise Detailed Analysis:1. Classification of Rock Phosphate in Pebble Form under Customs Tariff:The petitioner, a public limited company manufacturing chemicals, imported rock phosphate in pebble form, which was initially cleared under Entry 35 of the Customs Tariff without duty but with countervailing duty. However, upon a subsequent import, the Customs authorities assessed the rock phosphate under the residuary Entry 87, imposing a 60% ad valorem duty. The petitioner contested this classification and sought a refund of the excess duty paid under protest.2. Interpretation of Entry 35 and Entry 87 of the Customs Tariff:The core issue was whether rock phosphate in pebble form should be classified under Entry 35, which pertains to 'Manures, all sorts, including... mineral phosphates, imported in a form indicative of their use for manurial purposes,' or under the residuary Entry 87, which covers 'All other articles not otherwise specified.' The Customs authorities argued that since rock phosphate in pebble form could not be directly used for manurial purposes without pulverization, it did not fall under Entry 35. The petitioner contended that the phrase 'in a form indicative of their use for manurial purposes' in Entry 35 should include rock phosphate in pebble form, as it is ultimately used for manurial purposes after processing.3. Refund of Duty Paid Under Protest:The petitioner paid the duty under protest and applied for a refund, which was rejected by the Assistant Collector of Customs, the Appellate Collector of Customs, and the Joint Secretary to the Government of India. The petitioner then filed the present petition seeking the refund of Rs. 10,39,520/-.Judgment Analysis:Classification and Interpretation:The court examined the phraseology of Entry 35 and concluded that it does not require the material to be in a form directly or immediately fit for use as a fertilizer. The court emphasized the importance of the word 'indicative,' interpreting it to mean that the form should suggest potential use for manurial purposes, even if further processing is required. The court noted that rock phosphate, whether in powder or pebble form, remains a chemical fertilizer and is capable of being used for manurial purposes after necessary processing.Revisional Authority's Reasoning:The revisional authority had rejected the petitioner's claim, stating that rock phosphate in pebble form could not be used directly as a fertilizer and required chemical treatment. The court disagreed, highlighting that even rock phosphate in powder form often requires further pulverization and chemical treatment before use. The court found the department's differential treatment of rock phosphate in powder and pebble forms to be inconsistent and unjustified.Binding Nature of Trade Notices:The court also referenced a Trade Notice issued on 18th August 1969, which stated that natural rock phosphate would be liable to countervailing duty on import into India. The court held that such Trade Notices are binding on the government, as established by precedent.End-Use and Form:The court rejected the argument that the end-use of the rock phosphate or its form when sold to a purchaser should determine its classification under Entry 35. The court clarified that the criterion is the capability of use for manurial purposes, not the actual end-use or the immediate form.Conclusion:The court concluded that Entry 35 applies to the petitioner's goods, as the rock phosphate in pebble form is indicative of its use for manurial purposes. The petition was allowed, and the court ordered the refund of Rs. 10,39,520/- to the petitioner within four months, excluding interest. The rule was made absolute, and no costs were awarded.Final Order:The petition is allowed in terms of prayers (a) and (b) with the exclusion of the words 'plus interest at 12% per annum approximately' in prayer (b). The amount of Rs. 10,39,520/- shall be refunded to the petitioner within four months from today. There will be no order as to the costs of the petition. Rule is made absolute accordingly.