1997 (2) TMI 314 - AT - Central Excise

Summary

Issues:
Classification of Molten Urea under Notification No. 40/85, Applicability of Notification No. 217/86

Analysis:
The appeal involved the classification of Molten Urea under Notification No. 40/85 and the applicability of Notification No. 217/86. The appellant, a Public Limited Company engaged in manufacturing Fertilizers and Chemicals, used Molten Urea to produce Melamine. The appellant claimed that Molten Urea, used in manufacturing Melamine, should be classified as fertilizer under Notification No. 40/85, which exempts Ammonia used in fertilizer production. The Department argued that since Melamine is not a fertilizer, the benefit did not apply. The appellant also sought benefit under Notification No. 217/86. The Tribunal analyzed the legal provisions and previous judgments to determine the classification and eligibility for exemptions.

The appellant contended that Molten Urea, even if used for industrial purposes, should be classified as fertilizer under Chapter 31, as per Chapter Notes 1 & 2. The Tribunal noted that Chapter 31 explicitly treated Molten Urea as fertilizer, irrespective of its use, for tariff classification and exemption purposes. The appellant argued that even if not eligible under Notification No. 40/85, they should benefit from Notification No. 217/86, citing a previous Tribunal order in their favor.

The Department highlighted the language of Notification No. 40/85, emphasizing that it exempted only Ammonia used in fertilizer production. Since Molten Urea was used to produce Melamine, not a fertilizer, the benefit did not apply. The Department relied on a previous CEGAT order to support their position. The Tribunal acknowledged the amendment to Chapter Note 1 post-1987 but maintained that the criterion of Ammonia use in fertilizer production continued for the notification's eligibility. The Tribunal upheld the Department's argument regarding the non-eligibility under Notification No. 40/85 due to Melamine production.

Regarding Notification No. 217/86, the Tribunal found the issue covered by a previous Tribunal order cited by the appellant. The Tribunal remanded the matter to the Assistant Collector to consider the appellant's claim under Notification No. 217/86 in line with the Tribunal's previous orders. The appeal was allowed based on the Tribunal's decision on Notification No. 217/86, requiring further examination by the authorities.