1997 (5) TMI 170 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No.181/86-C.E. dated 1-3-1986 regarding exemption to fertilizers.
2. Classification of 'Basic Slag' under Chapter 31 and determination of its usage as fertilizer or soil conditioner.

Analysis:
The primary issue in this appeal before the Appellate Tribunal CEGAT, CALCUTTA was the interpretation of Notification No.181/86-C.E. dated 1-3-1986 concerning the exemption to fertilizers. The central question was whether the 'Basic Slags' manufactured by the respondent company were entitled to the benefits outlined in the said Notification. The Tribunal noted that the dispute revolved around the classification of 'Basic Slag' under Chapter 31 and whether it was utilized as a fertilizer. The lower appellate authority had determined that the product was indeed used as a fertilizer based on the manner of its use as discussed in the Order-in-Original by the Assistant Commissioner.

The Tribunal considered the arguments presented by both sides. The Revenue contended that 'Basic Slag' should be classified as a 'Soil Conditioner' rather than a fertilizer. The Revenue distinguished between the two terms, highlighting that a fertilizer primarily acts as a plant nutrient, whereas a soil conditioner is utilized to improve soil conditions by reducing acidity and enhancing soil quality. The Revenue supported its argument by referencing technical literature, including Hawley's Condensed Chemical Dictionary and the product literature provided by the respondents themselves.

In response, the respondents' advocates argued that while 'Basic Slag' could function as a soil conditioner, it was marketed and used as a fertilizer. They pointed to publications such as the evaluation by the Indian Council of Agricultural Research, which demonstrated the usage of Basic Slag as a phosphatic fertilizer. Additionally, they highlighted marketing materials, such as an order from a cooperative marketing federation, indicating that Basic Slag was treated and supplied as a fertilizer in the market.

After carefully evaluating the evidence and submissions from both parties, the Tribunal sided with the respondents. They noted that the Indian Council of Agricultural Research publication clearly established the use of 'Soil Conditioner' as a significant phosphatic fertilizer globally. Consequently, the Tribunal upheld the respondents' contention and dismissed the Revenue's appeal, affirming that Basic Slag should be considered as a fertilizer eligible for the benefits under Notification No.181/86-C.E.