1987 (5) TMI 356 - AT - Central Excise

Issues Involved:
1. Classification of Ammonium Nitrate (melt) as a fertilizer.
2. Eligibility for duty exemption under Notification No. 145/71-C.E. and 147/74-C.E.
3. Applicability of the time-limit for issuing a demand for duty.

Detailed Analysis:

1. Classification of Ammonium Nitrate (melt) as a Fertilizer:
The appellants argued that Ammonium Nitrate (melt) should be classified as a fertilizer under Tariff Item 14-HH, citing Notification No. 164/69-C.E., which initially listed it as a fertilizer. However, this classification was challenged by the Department, which pointed out that Notification No. 225/79-C.E. had removed Ammonium Nitrate from the list of fertilizers, and Trade Notice No. 53/1-Fertilizer/79 further clarified that Ammonium Nitrate (melt) would be dutiable under Item 68. The Tribunal found that Ammonium Nitrate (melt) produced by the appellants was used exclusively for manufacturing Ammonium Nitrate (Prilled), an explosive, and not as a fertilizer. The Tribunal concluded that Ammonium Nitrate (melt) was not of fertilizer grade and thus could not be classified under Tariff Item 14-HH.

2. Eligibility for Duty Exemption under Notification No. 145/71-C.E. and 147/74-C.E.:
The appellants claimed exemptions under Notification No. 145/71-C.E. and 147/74-C.E. for Low Sulphur Heavy Petroleum Stock (LSHS) and Ammonia used in the production of Ammonium Nitrate (melt). The Tribunal held that since Ammonium Nitrate (melt) was not classified as a fertilizer, the exemptions provided under these notifications were not applicable. Consequently, the LSHS and Ammonia used in manufacturing Ammonium Nitrate (melt) were not entitled to duty exemption.

3. Applicability of the Time-Limit for Issuing a Demand for Duty:
The appellants contended that the demand for duty was barred by the six-month limitation period under Rule 10(1) of the Central Excise Rules and Section 11-A of the Central Excises and Salt Act, 1944. However, the Department argued that the appellants had deliberately ignored Trade Notice No. 53/1-Fertilizer/79 and Notification No. 225/79-C.E., and had failed to maintain proper records despite instructions from the Inspector In-Charge. The Tribunal found that the appellants' deliberate omission to maintain necessary records and their attempt to evade duty justified the application of the extended five-year limitation period. The Tribunal upheld the longer period of time-limit for issuing the demand for duty.

Conclusion:
The Tribunal concluded that Ammonium Nitrate (melt) produced by the appellants was not a fertilizer and was correctly classified under Item 68 of the Central Excise Tariff. The exemptions under Notification No. 145/71-C.E. and 147/74-C.E. were not applicable. The extended five-year time-limit for issuing the demand for duty was justified due to the appellants' deliberate evasion and failure to maintain proper records. The duty demand and penalty imposed by the Collector were upheld, and the appeal was dismissed.

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