Use-based fertiliser exemption applied to sulphuric acid used in manufacturing zinc sulphate, despite tariff classification debate.

Sulphuric acid used to manufacture zinc sulphate was treated as eligible for exemption under Notification No. 81/75-C.E. because the relevant test was whether the end product functioned as a fertiliser. The analysis notes that zinc sulphate was recognised as a micronutrient used in agriculture and that earlier precedent, together with the binding Board circular, supported classification of micronutrients under Heading 31.05. For this use-based exemption, the decisive factor was the fertiliser use of zinc sulphate, not whether it strictly met the tariff description of fertiliser under Chapter Note 6.

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Issues: Whether sulphuric acid used in the manufacture of zinc sulphate was eligible for exemption under Notification No. 81/75-C.E. on the footing that zinc sulphate is used as a fertiliser.

Analysis: The exemption notification applied where sulphuric acid was used in the manufacture of fertilisers. Although Chapter Note 6 to Chapter 31 treats "other fertilisers" as products containing nitrogen, phosphorus or potassium as an essential constituent, zinc sulphate was recognised as a micronutrient used in agriculture and as a fertiliser for plant growth. The Tribunal relied on earlier precedent and the binding character of the Board's circular, which treated micronutrients listed in the Fertiliser Control Order, 1985 as classifiable under Heading 31.05. For the purpose of the exemption, the decisive factor was the use of zinc sulphate as a fertiliser, not its precise tariff classification.

Conclusion: The sulphuric acid used in the manufacture of zinc sulphate qualified for the exemption, and the departmental appeal failed.

Ratio Decidendi: For a use-based exemption, the relevant inquiry is whether the end product is used as a fertiliser, and not whether it strictly satisfies the tariff description of fertiliser under Chapter Note 6.

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