1990 (4) TMI 122 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification 81/75 dated 22-3-1975 regarding exemption for sulphuric acid used in the manufacture of fertilizer.
2. Classification of zinc sulphate as fertilizer under the Central Excise Tariff Act, 1985.
3. Applicability of duty exemption under Notification 81/75 to zinc sulphate production.
4. Comparison of major fertilizers and micronutrients for determining fertilizer classification.

Analysis:

1. The case involved an appeal against the order of the Collector of Central Excise (Appeals) upholding a demand for Central Excise duty on sulphuric acid used in manufacturing zinc sulphate. The appellants contended that the exemption under Notification 81/75 applied as zinc sulphate was considered a fertilizer. The notification did not specify a particular tariff heading for fertilizer, and the appellants had been availing the exemption before the change in classification due to the Central Excise Tariff Act, 1985.

2. The Department argued that zinc sulphate did not qualify as a fertilizer under Chapter 31 of the Central Excise Tariff Act, 1985, as it did not contain essential fertilizing elements like nitrogen, phosphorus, or potassium. Reference was made to Chapter Note 2 of Chapter 31, which excluded zinc sulphate from the definition of fertilizer. The Department also relied on a previous CEGAT order to support the liability to pay duty.

3. The Tribunal analyzed the definition of fertilizer and micronutrients, considering the essential nutrients required for plant growth. The decision in a previous case regarding zinc sulphate as a fertilizer under Item 14-HH of the Central Excise Tariff Act was referenced. The Tribunal concluded that zinc sulphate could be classified as a fertilizer based on technical works, the Fertilizer (Control) Order, and trade parlance. It was held that the sulphuric acid used in manufacturing zinc sulphate was eligible for exemption under Notification 81/75.

4. The Tribunal's decision emphasized the distinction between major fertilizers and micronutrients, noting that both types provide essential nutrients to plants. The judgment highlighted the relevance of technical literature and industry practices in determining the classification of products as fertilizers. The ruling considered the broader implications of defining micronutrients as fertilizers beyond specific tariff headings, supporting the appellants' claim for duty exemption.

Conclusion:
The Tribunal allowed the appeal, holding that the sulphuric acid used in the manufacture of zinc sulphate was eligible for exemption under Notification 81/75 dated 22-3-1975. The decision was based on the classification of zinc sulphate as a fertilizer, supported by technical analysis and industry standards, despite the change in tariff classification under the Central Excise Tariff Act, 1985.