1995 (3) TMI 264 - AT - Central Excise

Summary

Issues:
Classification of manufactured ammonium chloride under Notification 66/71 for duty exemption.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi centered around the classification of ammonium chloride manufactured by the respondent under Notification 66/71 for duty exemption. The respondent had filed a classification list categorizing the products as muriate of ammonia commercial grade, technical-grade ammonium chloride, and ammonium chloride fertilizer. The dispute arose as the respondent claimed a refund of duty paid on ammonia used for manufacturing the first two products under the mentioned notification. The Assistant Collector rejected the claim, arguing that the products did not qualify as fertilizer. However, the Collector (Appeals) overturned this decision based on a previous Tribunal case.

During the hearing, the Tribunal analyzed previous decisions cited by both parties. The Tribunal noted that the Collector (Appeals) relied on a previous case involving ammonium chloride's classification under a different notification. The respondent's consultant referenced a case where the Tribunal allowed duty exemption for goods used in manufacturing urea technical grade, considering it as fertilizer. The Tribunal acknowledged the complexity of classifying ammonium chloride based on purity grades and commercial usage, emphasizing that commercial understanding determines excisability and classification.

The Tribunal delved into the commercial reality of the situation, distinguishing between theoretical and practical uses of ammonium chloride. It highlighted the importance of commercial parlance in determining classification, noting that different grades of ammonium chloride were classified under separate tariff items. The Tribunal emphasized that the respondent did not market or use the ammonium chloride as fertilizer, as explicitly stated in the classification list. Additionally, a circular from the Central Board of Excise & Customs supported the Department's argument that fertilizer used for industrial purposes is subject to duty.

Ultimately, the Tribunal concluded that the respondent failed to demonstrate the use of the manufactured ammonium chloride in fertilizer production, thereby disqualifying it from the duty exemption under Notification 66/71. Consequently, the Tribunal set aside the Collector (Appeals) order and reinstated the Assistant Collector's decision.