1986 (7) TMI 104 - SC - Central Excise

Mono-Ammonium Phosphate imported for the manufacture of complex fertilisers which in turn is used a manure

Issues Involved:
1. Interpretation of Notification No. 178/76-Cus.
2. Applicability of Notification No. 177/76-Cus. for comparison.
3. Whether Mono-Ammonium Phosphate retains its properties in the mixture.
4. Validity of the demand for customs duty.
5. Clarification from the Central Government.

Issue-wise Detailed Analysis:

1. Interpretation of Notification No. 178/76-Cus.:
The appellant argued that Mono-Ammonium Phosphate used in the production of complex fertilizers, which are used as manure, should be exempt from customs duty under Notification No. 178/76-Cus. The Notification exempts Ammonium Phosphate from customs duty when imported for use as manure. The appellant contended that the Notification does not specify that Mono-Ammonium Phosphate must be used directly as manure. The court noted that the language of Notification No. 178/76-Cus. is clear and unambiguous, and the key issue is whether the appellant imported Mono-Ammonium Phosphate for use as manure.

2. Applicability of Notification No. 177/76-Cus. for comparison:
The respondent argued that Notification No. 177/76-Cus., which exempts Di-Ammonium Phosphate from customs duty when imported for use as manure or in the production of complex fertilizers, should be considered. The absence of similar language in Notification No. 178/76-Cus. indicates that the exemption is not applicable for the production of complex fertilizers. The court, however, held that the intention of the government should not be inferred by comparing the two Notifications, as Notification No. 178/76-Cus. is clear in its terms.

3. Whether Mono-Ammonium Phosphate retains its properties in the mixture:
The court acknowledged the argument that if Mono-Ammonium Phosphate, when mixed with Urea and muriate of Potash, forms a new chemical compound and loses its identity, the appellant would not be entitled to the exemption. The court noted that this point was raised for the first time before it and was not considered by the lower tribunals. Therefore, the matter was remanded to the Appellate Tribunal to determine whether a new chemical compound is formed and whether Mono-Ammonium Phosphate retains its properties in the mixture.

4. Validity of the demand for customs duty:
The Assistant Collector of Customs issued a notice demanding customs duty of Rs. 60,34,419.56, which was confirmed by the Collector of Customs and the Appellate Tribunal. The court set aside the order of the Appellate Tribunal and remanded the case for further consideration on the specific issue of whether Mono-Ammonium Phosphate retains its properties in the mixture.

5. Clarification from the Central Government:
The appellant sought clarification from the Ministry of Finance regarding the applicability of Notification No. 178/76-Cus. to the consignment in question. The court noted that the Central Government could issue a clarification regarding the applicability of the Notification to the consignment imported by the appellant for use in the production of complex fertilizers.

Conclusion:
The Supreme Court set aside the order of the Appellate Tribunal and remanded the case to it with a direction to decide whether Mono-Ammonium Phosphate retains its physical and chemical properties in the mixture used to produce complex fertilizers. The Appellate Tribunal is to decide this issue after giving both parties an opportunity to present their materials and arguments. The appeal was disposed of with this direction.

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