2021 (9) TMI 687 - AT - Central Excise

Classification of goods - Di-calcium phosphate (animal feed grade), manufactured and cleared under brand name PROPHOS - classified under CETH 2835 or under CETH 2309 - HELD THAT - It is seen that as per the N/N. 4/2016-CE(NT) dated 12.2.2016, levy of duty of excise on di-calcium phosphate (animal feed grade) of rock phosphate origin falling under Heading 2835 of the First Schedule to CETA, 1985 is not required to be paid under the said Notification issued under section 11C of the Act. Taking into account that the Notification issued under section 11C would apply in full force, demand confirmed cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Demand of central excise duty on Di-calcium phosphate (animal feed grade), classification of the product under Chapter Heading 2835 or Heading 2309, applicability of exemption notifications, interpretation of Notification 4/2016-CE(NT) dated 12.2.2016, and the impact of relevant case laws on the current case.

Analysis:
The appeal revolved around the demand for central excise duty on Di-calcium phosphate (animal feed grade) and the classification of the product under different headings. The appellant argued that they manufactured the product from rock phosphate and initially cleared it under CETH 2309 without paying duty, benefiting from an exemption under Notification No. 7/1994. However, this exemption was rescinded later. The appellant continued to classify the product under Chapter 23, attracting a NIL rate, until a Show Cause Notice proposed reclassification under CETH 2835. Subsequently, they informed the department of the revised classification as CETH 23099010. The crux of the issue was whether the duty demand for the disputed period was valid based on the changing classifications and the introduction of the eight-digit code in 2005.

The appellant contended that the product 'PROPHOS' fell under Chapter Heading 2835 but was exempt from central excise duty for a specific period as per Notification No. 4/2016-CE (NT) dated 12.2.2016. This notification waived the duty on Di-calcium phosphate manufactured from rock phosphate under Heading 2835. The appellant cited relevant case laws where similar products were held to be exempt under the 11C Notification dated 12.2.2016. The argument focused on the exemption notifications and their applicability to the product in question, emphasizing that the demand for duty for a particular period should not be sustained.

After hearing both parties, the Tribunal analyzed the classification of the animal feed grade product 'PROPHOS' and the implications of Notification 4/2016-CE(NT) dated 12.2.2016. The Tribunal noted that under this notification, the levy of excise duty on Di-calcium phosphate of rock phosphate origin under Heading 2835 was not required. Consequently, the demand for duty could not be upheld, and the impugned order was set aside. The appeal was allowed, with any consequential reliefs granted as necessary. The judgment highlighted the importance of correctly interpreting exemption notifications and applying them to determine the liability for central excise duty on specific products.