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TMI Blog1996 (7) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... es under Chapter X procedure. In the same way they had manufactured white/yellow phosphorus weighing 2,09,244.75 kgs. and cleared in their factory i.e. PCB Plant for the manufacture of pesticides/insecticides intermediates i.e. Phosphorus Tri-chloride under Notification No. 43/88, dated 1-3-1988 as amended without payment of duty. 3. The department felt that as per the classification list No. 68/90, dated 21-3-1990 approved by the Assistant Collector of Central Excise and Customs Division-V, Baroda, Yellow Phosphorus is not mentioned in the Notification No. 43/88 dated 1-3-1988 as amended, hence it was felt that the exemption is not available under the said Notification as amended to white/yellow phosphorus. Hence they were called upon to explain as to why the said amount as mentioned in the show cause notice should not be recovered from them under Section 11A of the Central Excises and Salt Act, 1944. The assessee had explained in their reply to the show cause notices that both white phosphorus and yellow phosphorus represented one single commodity. In support of their plea they had produced a copy of the relevant page from Merck Index . It was also pleaded that in the trade, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted from duty. He has held that these intermediates in the respondent s case include white/yellow phosphorus, Phosphorus, Phosphorus Tri-chloride and phosphorus pentasulphide. He has held that the Notification provides full exemption to the goods listed in the Notification, when they are used in the manufacture of products falling under sub-heading No. 3808.10. He held that the nature of these products is that they are intermediates in the manufacture of pesticides/insecticides falling under subheading 3808.10. He held that yellow or white phosphorus is used in all the intermediate products and when such intermediate products finally used in the pesticides/insecticides, it has to be considered that white or yellow phosphorus has been used in the manufacture of pesticides or insecticides falling under Tariff Sub-heading No. 3808.10 through the other intermediates. He has held that the intention of the Government in providing exemption under the Notification is very clear that all the raw material listed in the Notification, whether they are used directly or through other intermediates in the manufacture of pesticides/insecticides to get exemption. He has observed that it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be a reason to hold that the Notification grants exemption to white phosphorus removed under Chapter X procedure for manufacture of phosphorus tri-chloride. He gives the reason that phosphorus tri-chloride is also utilised for manufacture of other items. He submits that what is required to be considered is as to whether white phosphorus was being utilised for manufacture of pesticides. According to him the answer is that the product arising from white phosphorus is phosphorus tri-chloride which does not fall under Chapter 38 but under Chapter 29. He submits that the Notification applies only if the named item under Notification are utilised for manufacture of final goods falling under 38. As the intermediate product falls under Chapter 29, the benefit of the Notification cannot be extended. 9. The Learned Advocate submitted that only ground raised in the show cause notice was that the white phosphorus is different from yellow phosphorus and hence the benefit of Notification cannot be extended. The plea raised by the Learned DR is beyond the scope and the grounds taken up in the show cause notice. He submits that the Tribunal cannot go beyond the scope of the show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The impugned Notification grants exemption to goods of the description specified in the annexure of the Notification falling under Chapter 28 and 29 of the schedule to the Central Excise Tariff Act,1985 and used for manufacture of goods falling under sub-heading 3808.10 from whole of the duty of excise leviable thereon which is specified in the said schedule of the Tariff Act. At serial No. 5 of the annexure to the Notification phosphorus tri-chloride is mentioned and at serial No. 16 phosphorus white is mentioned. The proviso to the Notification states that where such use is elsewhere then in the factory of production of the goods, the exemption contained in this Notification shall be allowed subject to observance of the procedure set out in Chapter X of the said rules. In this case the Revenue has not contested the observance of the Chapter X rules by the assessee, The only ground raised in the show cause notice is that phosphorus white is different from phosphorus yellow. In this regard, Assistant Collector and the Collector both have referred to the technical term described in the Hawley s Chemical Dictionary and the Merc Index and have come to the conclusion that the term w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal product namely, insecticides, fungicides, herbicides, weedicides and pesticides which fall under 3808.10". It has been explained that the emergence of phosphorus tri-chloride is a technological necessity and that pesticides cannot emerge directly from phosphorus white. The intermediate item phosphorus tri-chloride has been removed under Chapter X procedure for the manufacture of pesticides, in terms of the Notification and hence the benefit cannot be denied to the assessee. The Notification cannot be read in such a manner as to make the Notification otiose as has been contended by the Learned Advocate and in this regard, citations relied by him is relevant. 14. We also notice that the plea taken by the Learned Advocate that the demands raised by the Revenue are barred by time is correct. The department were aware of the clearance as the said clearance had been done under Chapter X procedure and all the details were cleared and were available with the department. There is no case made out in the show cause notice for invoking larger period hence demands as contended by the Learned Advocate is also barred by time. 15. In the case of Goodlass Nerolac Paints Ltd. (supra), the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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