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2024 (5) TMI 273 - AT - Central ExciseClassification of goods - Sulphuric Acid, used in the manufacture of Agricultural Grade Zinc Sulphate - classified as fertiliser under Chapter 31 of CETA or classifiable under 28332990 of CETA - benefit of exemption N/N. 04/2006-CE (Sl.No. 32) dated 01.03.2006 - HELD THAT - The appellants have relied on the decision in the case of PUNJAB MICRO NUTRIENTS LTD. VERSUS COLLECTOR OF C. EX. 1990 (4) TMI 122 - CEGAT, NEW DELHI in support of their contention that the benefit of exemption Notification No. 04/2006-CE dated 01.03.2006 is available for procuring Sulphuric Acid without payment of duty. The ratio of the above decision has been followed in the case of Himgiri Metal Pvt. Ltd. Vs. Commissioner of Central Excise, Meerut-I 2014 (12) TMI 1030 - CESTAT NEW DELHI where it was held that 'The only requirement in the present Notification which was also introduced in the previous Notification by way of including Explanation is to explain the meaning of fertilizer. It stands mentioned in the Explanation that fertilizer shall have the meaning assigned to it under Fertilizer (Control) Order, 1985.' In Jyothi Chemicals Fertilisers 2023 (8) TMI 1141 - SC ORDER , the plea raised by appellant that Zinc Sulphate (agricultural grade) is known as fertiliser in common parlance was not considered as the said plea was not raised by appellant therein before earlier forums. Appreciating the ratio of the above decisions as applicable to the facts obtaining in these appeals, the impugned Order cannot sustain and ordered to be set aside - appeal allowed.
Issues Involved:
1. Whether the Sulphuric Acid procured without payment of duty and used in the manufacture of Agricultural Grade Zinc Sulphate is eligible for the benefit of exemption Notification No. 04/2006-CE when the product manufactured is not classified as fertilizer under Chapter 31 of CETA. Summary: Issue 1: Eligibility of Exemption for Sulphuric Acid Background: The appeals were filed by M/s. ICMC Corporation Limited and M/s. IACL Private Limited, challenging the orders confirming duty demands on Sulphuric Acid procured without payment of duty and used in the manufacture of Agricultural Grade Zinc Sulphate. The Department contended that Zinc Sulphate, classified under Chapter 28, does not qualify for exemption as it is not classified as fertilizer under Chapter 31 of CETA. Arguments by Appellants: - Classification of fertilizer under a particular tariff heading 31 is not a pre-condition for eligibility of exemption under serial number 32 of Notification No. 04/2006-CE. - The only condition to be satisfied is that the input 'Sulphuric Acid' should be used in the manufacture of fertilizer. - Agricultural Grade Zinc Sulphate, though classified under Chapter 28, is used as a fertilizer in agriculture. - Various case laws support that the classification of fertilizer is not relevant for exemption purposes. Arguments by Revenue: - Zinc Sulphate (Agriculture Grade) is a separate defined chemical compound, falling under Chapter 28 and not classifiable under Chapter 31 as fertilizer. - The benefit of the exemption Notification cannot be extended as the product is not classified as fertilizer. Judgment: - The Tribunal noted that the relevant Notification No. 04/2006-CE exempts Sulphuric Acid used in the manufacture of fertilizer, without specifying that the fertilizer must be classified under Chapter 31. - The Tribunal referred to several precedents where it was held that the classification of fertilizer under a particular tariff heading is not a pre-requisite for exemption. - The Tribunal found that Agricultural Grade Zinc Sulphate is used as a fertilizer and distributed to farmers, fulfilling the condition of the exemption Notification. - The Tribunal set aside the impugned orders and allowed the appeals, granting consequential relief to the appellants. Conclusion: The appeals were allowed, and the orders confirming the duty demands were set aside, recognizing that the Sulphuric Acid used in the manufacture of Agricultural Grade Zinc Sulphate qualifies for the exemption under Notification No. 04/2006-CE, irrespective of the product's classification under Chapter 28 or Chapter 31 of CETA.
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