Tariff classification of sodium nitrate under fertiliser heading depends on Indian trade understanding; later amendment was prospective only.

For the pre-10-2-1987 tariff period, sodium nitrate was not classifiable under Heading 31.02 because classification under Chapter 31 depended on whether the product was known in Indian trade as a fertiliser. The material relied on by the Revenue showed only that sodium nitrate could be used as a fertiliser, while the assessee's evidence, including the Fertiliser Control Order and Indian standards, indicated that it was not so known in India. The later insertion of Chapter Note 2 to Chapter 31, which expressly included sodium nitrate from 10-2-1987, operated by legal fiction and was prospective, not merely clarificatory.

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Issues: Whether sodium nitrate was classifiable under Heading 31.02 of the Central Excise Tariff Act, 1985 prior to 10-2-1987 as a nitrogenous chemical fertiliser, and whether the amendment effective from 10-2-1987 could be treated as clarificatory and applied retrospectively.

Analysis: Prior to 10-2-1987, Chapters 28 and 31 of the Central Excise Tariff Act, 1985 were not fully aligned with the HSN, and therefore HSN-based interpretation could not by itself govern the earlier period. For classification under Heading 31.02 read with Chapter Note 1 to Chapter 31, the Revenue had to establish that sodium nitrate was known in Indian trade as a fertiliser. The evidence relied on by the Revenue showed only that sodium nitrate could be used as a fertiliser, while the material produced by the assessee, including the Fertiliser Control Order and Indian standards, indicated that it was not known in India as a fertiliser. The subsequent introduction of Chapter Note 2 to Chapter 31 with effect from 10-2-1987 specifically including sodium nitrate operated by legal fiction and was not merely clarificatory.

Conclusion: Sodium nitrate was not classifiable under Heading 31.02 for the period prior to 10-2-1987, and the amendment from 10-2-1987 did not apply retrospectively.

Ratio Decidendi: For pre-alignment tariff periods, classification under a fertiliser heading depends on whether the product is known as a fertiliser in Indian trade, and a later amendment specifically bringing the product within the heading is prospective unless the statute clearly makes it retrospective.

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