TaxTMI 
TaxTMI 
2009 (12) TMI 750
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....5-C.E., dated 17-3-85, as amended. The Appellants were also receiving sulphuric Acid at nil rate of duty under Notification No. 81/75-C.E., dated 22-3-75, as amended, for use in the manufacture of Agricultural grade zinc sulphate. The Agricultural grade zinc sulphate is being manufactured by the Appellant since the year 1980. The jurisdictional central excise officers took samples of the goods being manufactured by the Appellant on 21-2-91, 18-1-92, 26-7-93 and 19-5-94 for ascertaining as to whether the goods are agricultural grade zinc sulphate. The chemical examiner, CRCL vide test reports dated 21-6-93, 3-9-93, 16-11-93 and 6-6-95 reported that in the first two cases, the samples, though zinc sulphate mono hydrate, an inorganic Chemical,....
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....ived duty free under Rule 196, was confirmed; and (c) penalty of Rs. 5,00,000/- was imposed on the appellant under Rule 173Q(1) of the Central Excise Rules, 1944. 1.2.1 The Commissioner also held that extended period under proviso to Section 11A(1) is invokable as the Appellant have committed a fraud with intent to evade the payment of duty as they cleared non-agricultural grade zinc sulphate in the guise of agrigrade zinc sulphate. 1.3 It is against this order that the present appeal has been filed. 2. Heard both the sides. 2.1 Shri B.L. Narasimhan, Advocate, the learned Counsel for the appellant made the following submissions. (1) 90% sales of zinc sulphate are to agricultural departments of the state Governm....
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....les drawn on 21-2-91, 18-1-92, 26-2-93 and 19-5-94 are not reliable. (3) Samples drawn by the Department were tested after a long time by the CRCL while as per the procedure laid down in Fertilizer (Control) order, samples must be tested within 30 days from the date of drawl. After long storage, the Agrigrade zinc sulphate containing seven water molecules become mono-hydrate due to natural drying. The appellant in this regard wanted to cross examine the chemical examiner but the cross-examination was not allowed and thereby violating the principles of natural justice. (4) As per the details of the samples drawn by the Govt. Agencies and certificates from District Agricultural officers during the period of demand, the zinc sulphate man....
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.... goods manufactured during the period of dispute, are agrigrade zinc sulphate for use as micronutrients, which being covered by Fertilizer (Control) Order, 1985 is a fertilizer, in term of Explanation to this notification, the sulphuric acid used for their manufacture is eligible for duty exemption under Notification No. 81/75-C.E., dated 22-3-75. (10) In the circumstances of the case, there is no justification for invoking extended period under proviso to Section 11A(1) of the Central Excise Act, 1944. In view of Hon'ble Supreme Court's judgment in case of Ranadey Micronutrient, reported in 1996 (87) E.L.T. 19 (S.C.), the fact that the appellants are controlled by the Fertilizer Control order and the fact that they are supplying entire ....
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....e contrary to the test reports in respect of the same batches, of the District Agricultural Officers of the State Government, to whom the goods had been sold. 4. We have carefully considered the submissions from both the sides and perused the records. The Appellants, since 1980 manufacture zinc sulphate for supply to agricultural departments and cooperative federations of various State Governments and claim full duty exemption under Notification No. 40/85-C.E. claiming that the zinc sulphate is of agricultural grade for use as micronutrient. For manufacture of zinc sulphate, they also get sulphuric acid free of duty vide Notification No. 81/75-C.E., dated 22-3-75. There is no dispute about the facts that - (a) the appellan....
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.... zinc sulphate micronutrients as given in the Fertilizer (Control) Order, 1985 or in the BIS IS : 8249 -1976 - like zinc content, water content, PH, copper content etc. and thus, from the reports, it is not known as to on what basis it has been inferred that the samples are not of agricultural grade zinc sulphate. To that extent the reports are vague. On the other hand the goods supplied from the same batches, on being tested by District Agricultural Authorities, were found to be of agricultural grade. We also find that when on the appellants' request, another sample was drawn and tested by the Chief Chemist, the same was found to be of agricultural grade. In view of these circumstances, if the Department still chose to proceed against the ....