TaxTMI 
TaxTMI 
2024 (5) TMI 273
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 determined in terms of Section 11A(10) of Central Excise Act, 1944 (ACT) besides levy of applicable interest under Section 11AA read with Rule 6 ibid. The Order-in-Original ordered for recovery of amounts payable by enforcing the bond and bank guarantee executed by the Appellant with the jurisdictional authorities. 2. The brief facts of the case are as detailed below : - 2.1 M/s. ICMC Corporation Ltd., holders of Central Excise Registration AAAC17030DXM001 were engaged in the manufacture and clearance of agricultural grade Zinc Sulphate falling under CTH 28332990 of the Central Excise Tariff Act, 1985 (CETA) which was exempted from payment of duty vide Sl.No. 51A of Notification No. 04/2006-CE. For the manufacture of the Zinc Sulphate, they have procured Sulphuric Acid without payment of duty by availing exemption under Notification No. 04/2006-CE (S.No. 32) and following the procedure prescribed under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable goods) Rules, 2001 (CERGCR for short). 2.2 The Notification No. 04/2006-CE dated 01.03.2006 which was effective upto 16.03....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4 has been filed by M/s. IACL Private Limited, Trichy aggrieved by the Order-in-Appeal No. 25/2014 dated 21.03.2014 passed by Commissioner of Customs & Central Excise (Appeals), Trichy upholding the Order-in-Original No. 08/2013 dated 16.09.2013 which had confirmed the duty demand of Rs.1,71,289/- payable on the Sulphuric Acid procured between April 2011 to March 2012 under Rule 6 of Central Excise (Removal of Goods at Concessional rate of duty for Manufacture of Excisable goods) Rules, 2001 determined in terms of Section 11A(10) of Central Excise Act, 1944 (ACT) besides levy of applicable interest under Section 11AA read with Rule 6 ibid. The Order-in-Original ordered for recovery of amounts payable by enforcing the bond and bank guarantee executed by the Appellant with the jurisdictional authorities. Aggrieved, the Appellant filed an appeal before this forum in E/41450/2014. 4. As both the appeals involve an identical issue, they are being taken up together for disposal by this common order. 5. The arguments of appellants as evident from the grounds of appeal are summarised as below:- i. The classification of fertiliser under a particular tariff heading 31 is not a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso further established that 'Zinc' is to be considered as a fertiliser being essential for plant growth and development. xi. The first appellate authority heavily relied on the decision of the Hon'ble Tribunal in the case of Jyothi Chemicals [2010 (253) ELT 343 (Tribunal)] which is distinguishable to the facts of the present case and hence not applicable. 5.1 The Ld. Advocate Shri Gokarnesan appeared for the appellants and his arguments are that:- i. Exemption for Sulphuric Acid used in the manufacture of agricultural grade zinc sulphate has been given consistently from 1994 through various Notifications. ii. In the decision pertaining to M/s. Jyothi Chemicals and Fertilisers relied upon by lower authorities is 'per incurium' in as much as the Appellants in the cited case failed to present before the Hon'ble Tribunal the decisions in the cases of:- a. Punjab Micro Nutrients Ltd. Vs. Commissioner of Central Excise which was affirmed by the Hon'ble Supreme Court [1996 (88) ELT A72 (SC)] b. Commissioner of Central Excise, Chandigarh Vs. India Phospate and Carbonite [1998 (98) ELT 634 (Tribunal)] and c. Castrol India Ltd. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the manufacture of fertiliser. It was pointed out that Sulphuric Acid utilised in the manufacture of Agricultural Grade Zinc Sulphate falling under Chapter 28 is used as a fertiliser for distribution to farmers through Agricultural department of State Governments. It was also averred that the exemption for Sulphuric Acid utilised in the manufacture of the Agricultural Grade Zinc Sulphate was given consistently from 1994 through various Notifications. The Appellants cited various decisions supporting their contentions. 11. The relevant extracts of Notification No. 04/2006-CE is reproduced below for the sake of convenience:- Notification New Delhi, the 1st March 2006. No. 4 /2006-Central Excise 10 Phalguna, 1927 (Saka)G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading or tariff item of the Fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....- Del.)], which reads as follows:- "17. The fact that the appellants manufacture Zinc Sulphate which is a micro-nutrient classifiable under sub-heading 2833 26 10 is not in dispute. It is true that under Circular No. 79/79/94-CX dated 21st November, 1994, the Board had clarified that Micronutrients listed under Serial No. 1(F) of Schedule 1 Part (A) of the Fertilizer (Control) Order, 1985 and their mixtures (with or without N, P, K) as notified by the Central Government or a State Government would be appropriately classifiable under Heading 31.05 as "Other Fertilizers". Equally it is true that the Supreme Court in the case of Ranadey Micronutrients v. Collector of Central Excise, reported in 1996 (87) E.L.T. 19 (S.C.), had held that, "if the later circular is contrary to the terms of the statute, it must be withdrawn. While the later circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid". The ratio of the decision is that, the Circular issued by the Board in exercise of powers under Section 37-B of the said Act till it remains in force, is binding upon the Department. It is pertinent to note that the Board, subsequen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lassification under the Central Excise Tariff and regardless of such notification, the appropriate consideration should be : (i) whether or not the micronutrient in question is a separate chemically defined compound. If it is, then classification under 31.05 is ruled out; and (ii) if it is not, whether it contains N, P or K as laid down in the Explanatory Notes. 7. Therefore, it is clarified that classification of micronutrients may be done in accordance with the above guidelines. 8. The above clarification may be brought to the notice of the lower field formations and the trade interests may also be suitably advised. 9. Board's earlier Circular No. 79/79/94-CX, dated 21-11-1994 stands modified accordingly." 19. The difference between 'micronutrient' and 'fertilizer' for the purpose of classification under the Excise Law was well explained by this Tribunal in the said case of Ranadey Micronutrients Pvt. Ltd. v. Collector of Central Excise, Pune, reported in 1995 (75) E.L.T. 139 (T). Therein it was held thus : "7. Considered. The contention of the appellants that the Micronutrients are regarded in the trade as fertiliser....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts in support of their claim that micronutrients were also fertilisers. 9. They had claimed that certain nutrients like N, P, K are required by the plant in large quantities and are traditionally known as fertilisers. Others are required in smaller quantities, and the treace elements like Fe, Cu, Zn, Mn, Mo etc. are required only in very small quantities and are called as micronutrients." It is pertinent to note that the Apex Court in its order reported in 1996 (87) E.L.T. 19 (S.C.) (supra) allowed the appeal against the said order of the Tribunal on the point of applicability of the later circular, without disturbing the observations of the Tribunal in relation to the differentiation between 'micronutrients' and 'fertilizers'. 20. It is not the case of the appellants that the product manufactured by the appellants contains any of the essential constituent of the fertilizers, namely, nitrogen, phosphorous or potassium. 21. The entire case of the appellants is based on the contention that the final product manufactured by them is Agro Grade Zinc Sulphate and it is nothing but Zinc Sulphate Hepta Hydrate (Agro Grade) and the same is accordingly ce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....[(2023) 9 Centax 322 (SC)]. 13. The above decision was rendered on the legal plea raised by the appellant therein as to whether the explanation regarding the term "fertilisers" appended to entry No. 35 of the said Notification No. 04/2006-CE dated 01.03.2006 is applicable to the term 'fertilisers' appearing in entry No. 28 of the table under the Notification. In the explanation to entry No. 35 of the Notification, it is expressly stated that 'fertilisers' shall have the same meaning assigned to it under Fertiliser Control Order, 1985. The appellants' contention is that Zinc Sulphate is a fertiliser in common parlance and is a micro nutrients and is used in agriculture and even they sold the entire product to State Government for being supplied to the farmers that even by applying the common parlance theory, the product would be classifiable as fertilisers and the Notification mentions simply as a fertiliser and there is no condition for according the benefit of the Notification that Zinc Sulphate should be classifiable under Chapter 31 of the Central Excise Tariff Act, 1985 which deals with fertilisers. The appellants have relied on the decision in the case of Punjab Micro Nutri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Pvt. Ltd. v. Collector of Central Excise, Meerut relied upon by the appellants is relevant because in that decision the Tribunal had considered the same material, namely, zinc sulphate and the fact whether it will be a fertilizer or not. It had also considered the aspect of the distinction between nitrogen, phosphorus and potassium, which are to be found in major fertilizers and micronutrients. The Tribunal in that case had observed thus in para 11 of the decision, "Micronutrients are a group of nutrients which are essential for plant growth and development but are required by plants in small quantities. Iron, zinc, manganese, copper, boron, molybdenum and chlorine fall in this category. It is seen from the "Handbook on Fertilizer Usage", brought out by the Fertilizer Association of India, New Delhi, that the distinction between nitrogen, phosphorus and potassium which are to be found in the major fertilizers and micronutrients, lies in the fact that nitrogen, phosphorus and potassium are used in large quantities by plants. These are, therefore, called major or primary nutrients. Calcium, magnesium and sulphur are required relatively in small but inappreciable quantities and are c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Tri.-Del.)] as follows:- "2. The appellant/assessees are engaged in the manufacture of zinc sulphate (agricultural grade). For the said purpose they were procuring sulphuric acid without payment of duty in terms of Notification No. 4/2006-C.E., dated 1-3-2006. Serial No. 32 of the said Notification exempts sulphuric acid, along with some other items mentioned and used in the manufacture of fertilizers. The Explanation appears thereunder is to the effect that - "For the purpose of this exemption, 'fertilizers' shall have the meaning assigned to it under the Fertilizer (Control) Order, 1985". 3. Inasmuch as the zinc sulphate is classified under Chapter Heading 28 of the CETA, 1985, Revenue entertained a view that the same cannot be considered as fertilizers which are classifiable under Chapter Heading 31. Accordingly, they initiated proceedings against the assessee for denial of the benefit of Notification and consequent confirmation of demand. The said proceedings resulted in passing of the present impugned orders confirming demand and imposing penalties. As in one case, the Commissioner (Appeal) set aside the penalty, Revenue has filed the present appeal also. ....