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TMI Blog1990 (3) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... pletely exempt from licencing control as per Notification No. 111/78, and so the appellant did not apply for licence for manufacture under provisions of the Central Excises Salt Act, 1944 (hereinafter referred to as the said Act). On 09.09.1987, the appellant sold a consignment of 160 bags of product to M/s. Sri Chemicals and Fertilizers and the motor lorry carrying the above consignment to Pune, was intercepted by Anti Evasion Squad of Preventive Unit of Bangalore C.E. Collectorate. Goods were seized. Thereafter, the officers of the Department visited the factory of the appellant and stock of 14 bags of Ammonium Nitrate was seized alongwith some record. Statement of the appellant was recorded on 10.11.1987. Thereafter, show cause notice dated 02.03.1988 was issued to the appellant alleging that the appellant had suppressed the fact of manufacture of Ammonium Nitrate and had clandestinely cleared the said goods without paying C.E. Duty and following C.E. Procedure, during the years 1983-84 to 1987-88 of the value of Rs. 77,28,875/- attracting C.E. duty of Rs. 10,53,550/75. So, the appellant was called upon to show cause why the duty should not be demanded and to show cause why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er also, the total clearances, above Rs. 15 lakhs, would attract duty @ 5% only if the product is not treated as fertilizer. Even if licensing formalities were required to be observed and were not observed, then also concessional rate of duty could not be denied. There was no justification for levying penalty as the appellant bonafidely believed the product to be fertilizer and being exempt from duty, no licence was required to be taken by him. 4. Ld. D.R. contended that, as stated in the impugned order, the appellant had admitted that Ammonium Nitrate can be of different grades and all such grades could not be utilised as fertilizer. There is enough evidence on record to prove that in fact the product of the appellant was used for manufacture of explosives; for claiming benefit as a small scale unit, the appellant should have filed declaration, otherwise, he was not entitled to claim the benefit. So, the appeal should be dismissed. 5. Till 28-02-1986, fertilizers were covered under T.I. 14HH which read as under: 14HH - FERTILIZERS, all sorts, but excluding natural, animal or vegetable fertilisers when not chemically treated . 6. Under provisions of Notification No. 40/83- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers premises and he knew that they were selling the product, in question, to persons who did not use it for agricultural purposes and so the Ld. Collector has concluded that Ammonium Nitrate produced by him was of explosive grade and not of fertilizer grade . The Ld. Collector has also referred to Hindsons (P) Ltd. [1985(19) E.L.T. 19 (SC)] and M/s. Hico Products Ltd. (1983 E.L.T. 2483) wherein it has been held that predominant use of product is relevant for the purpose of classification. 12. We have also noted that several purchasers, who purchased the product from the appellant, have in their statements, admitted that the product which they purchased from the appellant were sold to persons who used them as explosives (as discussed in the impugned order). We have also noted that in the impugned order, contention of the appellant has been noted Ammonium Nitrate has not been classified under Fertilisers Control Order of 1957". We have also noticed trade notice issued by the Central Board of Excise Customs vide letter No. 30/29/69-CX.3, dated 28-08-1972 which states Technical or chemical grades of products whether specifically mentioned in the Fertiliser (Control) Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion, available for exemption in light of clear evidence that it was not being used as such. So, even if the Ld. Collector has classified the product under Chapter Heading 31.02 from 1-3-1986 and in our view rightly so and we uphold it then also the appellant would not be entitled to claim benefit of exemption under Notification No. 181/86. 15. The appellant has also claimed benefit of Notification No. 175/86 dated 1-3-1986 (as amended from time to time). According to this notification, the first clearances of the value of Rs. 15 lakhs would be totally exempt and thereafter on next clearances upto Rs. 60 lakhs, the duty exemption would be equivalent to an amount calculated @ 10% ad valorem. As per para 4 of the said notification, to claim such notification, the factory has to be registered with either of the authorities as stated therein but this condition is not applicable if - (a) in a case where the value of clearances from a factory during the preceding financial year or in the current financial year did not exceed or is not likely to exceed rupees seven and a half lakhs; or (b) in a case where a manufacturer who is manufacturing specified goods in a factory, other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 175/86 as per provisions of para 4(B). So, this contention is also not correct. (iii) Sh. Kohli also submitted that even if necessary formalities like filing of declaration, etc. were not observed by the manufacturer, then also he would be entitled to claim benefit of concessional rate, if he otherwise fulfils the conditions. He cited - (1) C.C.E. v. Atlas Radio and Electronics Pvt. Ltd, -1989 (39) E.L.T. 123 (Tribunal); (2) M/s. Himachal Air Products Ltd. v. C.C.E., Chandigarh -1988 (14) ECR 607 (Cegat NRB). 17. We are in agreement with this contention of Sh. Kohli. The benefit of exemption notifications should not be denied if the appellant is otherwise found eligible. On perusal of the impugned order, we find on page 7, a table showing financial yearwise clearance of the product, in question, and the appellant would be entitled to claim exemption on first clearances of ........ and at concessional rate of duty for the remaining clearances upto limits prescribed under various small scale exemption notifications, if otherwise eligible. 18. The Ld. Collector has imposed penalty of Rs. 1 lakh on the appellant. In his view, the appellant did not obtain the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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