1999 (8) TMI 385 - AT - Central Excise

Summary

Issues:
Appeal against duty demand, interest, and penalty for misdeclaration of value regarding import of anhydrous ammonia.

Analysis:
The appeal challenged Order-in-Original confirming duty demand, interest, and penalty due to misdeclaration of value on imported anhydrous ammonia. The appellant contended that duty exemption applied as the goods were for manufacturing ammonium nitrate classified as fertilizer under Central Excise Tariff Act. The appellant cited precedents like Gujarat State Fertilizer Co. v. C.C.E. and Steel Authority of India Ltd. v. C.C.E. to support their argument that end-use conditions did not affect duty exemptions. They argued that their end product was classified and assessed as fertilizer, hence entitled to Customs exemption despite different end use. The appellant emphasized the similarity between Customs and Central Excise notifications in terms of exemption for raw materials used in fertilizer manufacturing.

The Department reiterated the Order-in-Original, claiming the appellants challenged the assessment at import, not the alleged undervaluation. They argued that manufacturing ammonium nitrate did not imply fertilizer production, as the product was exclusively used for explosives, not fertilizers. The Department emphasized the specific use of the ammonium nitrate manufactured by the appellants for explosives, not fertilizer.

The appellant countered by referring to a clarification from the Ministry of Finance, stating that prilled Ammonium Nitrate qualified for the exemption. They highlighted that the end product was classified as fertilizer under the Central Excise Tariff, making it unjust to deny the exemption for imported raw materials based on different end product use. They stressed the consistency between the Central Excise and Customs Tariffs, both based on the Harmonized System Nomenclature (HSN).

After reviewing submissions and records, the Tribunal analyzed the Customs exemption notification, noting its applicability to imported products for fertilizer manufacturing. They observed that the prilled ammonium nitrate was classified as fertilizer under the Central Excise Tariff Act and had paid duty accordingly. Citing precedents, the Tribunal concluded that if the end product was classified and assessed as fertilizer, denying the exemption for imported raw materials would be incorrect. They upheld the appellant's argument that Customs exemption applied to raw materials used in fertilizer manufacturing, regardless of the end product's specific use. Consequently, the Tribunal set aside the Order-in-Original and allowed the appeal.