1997 (12) TMI 208 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 81/75 regarding exemption from central excise duty for sulphuric acid used in the manufacture of fertilizers, Classification of zinc sulphate as a fertilizer under Chapter 31, Applicability of CBEC circular and Supreme Court judgment in determining the classification of zinc sulphate as a fertilizer.

Analysis:

1. Interpretation of Notification No. 81/75: The department appealed against the order of the Collector (A) regarding the exemption under Notification No. 81/75 for sulphuric acid used in the manufacture of zinc sulphate. The department contended that since zinc sulphate did not contain essential fertilizing elements like nitrogen, phosphorus, or potassium, it should not be considered a fertilizer under Chapter 31.

2. Classification of Zinc Sulphate: The department argued that zinc sulphate should not be classified as a fertilizer under Chapter 31 as it did not contain the essential fertilizing elements. However, the Collector allowed the appeal based on the judgment in the case of Punjab Micro Nutrients Pvt. Ltd., which considered zinc sulphate as a micronutrient bearing product and eligible for the exemption under Notification No. 81/75.

3. Applicability of CBEC Circular and Supreme Court Judgment: The Counsel for the appellant referenced the Tribunal's decision in the case of Punjab Micro Nutrients and the Supreme Court judgment in the case of Ranadey Micro Nutrients to support the classification of zinc sulphate as a fertilizer. The CBEC circular clarified the classification of micronutrients, including zinc sulphate, as "Other Fertilizers" under Heading No. 31.05, despite the absence of essential fertilizing elements.

4. Judicial Interpretation and Decision: The Tribunal considered the contentions of both parties and observed that zinc sulphate, being utilized as a micronutrient in agriculture, could be classified as a fertilizer under Chapter 31. The Tribunal noted the binding nature of the CBEC circular and the Supreme Court's decision, which supported the classification of zinc sulphate as a fertilizer. The Tribunal also referred to previous decisions and technical works to establish that zinc sulphate could be considered a fertilizer. Consequently, the Tribunal upheld the Collector's decision, stating that the appellants rightly availed the benefit of the notification, and rejected the department's appeal.

In conclusion, the judgment clarified the classification of zinc sulphate as a fertilizer under Chapter 31, emphasizing its use as a micronutrient in agriculture. The decision relied on legal interpretations, previous judgments, and technical references to support the classification and application of the exemption under Notification No. 81/75.