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TMI Blog2024 (5) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... e Goods) Rules, 2001 determined in terms of Section 11A(10) of Central Excise Act, 1944 (ACT) besides levy of applicable interest under Section 11AA read with Rule 6 ibid. The Order-in-Original ordered for recovery of amounts payable by enforcing the bond and bank guarantee executed by the Appellant with the jurisdictional authorities. 2. The brief facts of the case are as detailed below : - 2.1 M/s. ICMC Corporation Ltd., holders of Central Excise Registration AAAC17030DXM001 were engaged in the manufacture and clearance of agricultural grade Zinc Sulphate falling under CTH 28332990 of the Central Excise Tariff Act, 1985 (CETA) which was exempted from payment of duty vide Sl.No. 51A of Notification No. 04/2006-CE. For the manufacture of the Zinc Sulphate, they have procured Sulphuric Acid without payment of duty by availing exemption under Notification No. 04/2006-CE (S.No. 32) and following the procedure prescribed under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable goods) Rules, 2001 (CERGCR for short). 2.2 The Notification No. 04/2006-CE dated 01.03.2006 which was effective upto 16.03.2012 and superseded by Notification No. 12/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggrieved by the Order-in-Appeal No. 25/2014 dated 21.03.2014 passed by Commissioner of Customs & Central Excise (Appeals), Trichy upholding the Order-in-Original No. 08/2013 dated 16.09.2013 which had confirmed the duty demand of Rs.1,71,289/- payable on the Sulphuric Acid procured between April 2011 to March 2012 under Rule 6 of Central Excise (Removal of Goods at Concessional rate of duty for Manufacture of Excisable goods) Rules, 2001 determined in terms of Section 11A(10) of Central Excise Act, 1944 (ACT) besides levy of applicable interest under Section 11AA read with Rule 6 ibid. The Order-in-Original ordered for recovery of amounts payable by enforcing the bond and bank guarantee executed by the Appellant with the jurisdictional authorities. Aggrieved, the Appellant filed an appeal before this forum in E/41450/2014. 4. As both the appeals involve an identical issue, they are being taken up together for disposal by this common order. 5. The arguments of appellants as evident from the grounds of appeal are summarised as below:- i. The classification of fertiliser under a particular tariff heading 31 is not a pre-condition for eligibility of exemption under serial number 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority heavily relied on the decision of the Hon'ble Tribunal in the case of Jyothi Chemicals [2010 (253) ELT 343 (Tribunal)] which is distinguishable to the facts of the present case and hence not applicable. 5.1 The Ld. Advocate Shri Gokarnesan appeared for the appellants and his arguments are that:- i. Exemption for Sulphuric Acid used in the manufacture of agricultural grade zinc sulphate has been given consistently from 1994 through various Notifications. ii. In the decision pertaining to M/s. Jyothi Chemicals and Fertilisers relied upon by lower authorities is 'per incurium' in as much as the Appellants in the cited case failed to present before the Hon'ble Tribunal the decisions in the cases of:- a. Punjab Micro Nutrients Ltd. Vs. Commissioner of Central Excise which was affirmed by the Hon'ble Supreme Court [1996 (88) ELT A72 (SC)] b. Commissioner of Central Excise, Chandigarh Vs. India Phospate and Carbonite [1998 (98) ELT 634 (Tribunal)] and c. Castrol India Ltd. Vs. Commissioner of Central Excise, Calcutta [2005 (181) ELT 367 (Supreme Court)]. Hence it was averred that the said decision is not a binding decision. 5.2 The Ld. Advocate placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural department of State Governments. It was also averred that the exemption for Sulphuric Acid utilised in the manufacture of the Agricultural Grade Zinc Sulphate was given consistently from 1994 through various Notifications. The Appellants cited various decisions supporting their contentions. 11. The relevant extracts of Notification No. 04/2006-CE is reproduced below for the sake of convenience:- Notification New Delhi, the 1st March 2006. No. 4 /2006-Central Excise 10 Phalguna, 1927 (Saka)G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arified that Micronutrients listed under Serial No. 1(F) of Schedule 1 Part (A) of the Fertilizer (Control) Order, 1985 and their mixtures (with or without N, P, K) as notified by the Central Government or a State Government would be appropriately classifiable under Heading 31.05 as "Other Fertilizers". Equally it is true that the Supreme Court in the case of Ranadey Micronutrients v. Collector of Central Excise, reported in 1996 (87) E.L.T. 19 (S.C.), had held that, "if the later circular is contrary to the terms of the statute, it must be withdrawn. While the later circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid". The ratio of the decision is that, the Circular issued by the Board in exercise of powers under Section 37-B of the said Act till it remains in force, is binding upon the Department. It is pertinent to note that the Board, subsequent to the said decision of the Supreme Court, issued another Circular No. 392/25/98-CX., dated 19th May, 1998 clarifying that : "3. The matter has been re-examined in the light of Supreme Court judgment in the case of Ranadey Micronutrients v. Collector of Central Excise - Civil A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contains N, P or K as laid down in the Explanatory Notes. 7. Therefore, it is clarified that classification of micronutrients may be done in accordance with the above guidelines. 8. The above clarification may be brought to the notice of the lower field formations and the trade interests may also be suitably advised. 9. Board's earlier Circular No. 79/79/94-CX, dated 21-11-1994 stands modified accordingly." 19. The difference between 'micronutrient' and 'fertilizer' for the purpose of classification under the Excise Law was well explained by this Tribunal in the said case of Ranadey Micronutrients Pvt. Ltd. v. Collector of Central Excise, Pune, reported in 1995 (75) E.L.T. 139 (T). Therein it was held thus : "7. Considered. The contention of the appellants that the Micronutrients are regarded in the trade as fertilisers and hence this classification should be preferred over in other classification as also held by the department in the past is not tenable because the criterion of trade parlance will only apply subject to the tariff definition. In this case w.e.f. 1-3-1986 when the new Central Excise Tariff was introduced, the Chapter Note 6 made it very clear that term x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e called as micronutrients." It is pertinent to note that the Apex Court in its order reported in 1996 (87) E.L.T. 19 (S.C.) (supra) allowed the appeal against the said order of the Tribunal on the point of applicability of the later circular, without disturbing the observations of the Tribunal in relation to the differentiation between 'micronutrients' and 'fertilizers'. 20. It is not the case of the appellants that the product manufactured by the appellants contains any of the essential constituent of the fertilizers, namely, nitrogen, phosphorous or potassium. 21. The entire case of the appellants is based on the contention that the final product manufactured by them is Agro Grade Zinc Sulphate and it is nothing but Zinc Sulphate Hepta Hydrate (Agro Grade) and the same is accordingly certified by National Testing Centre and, therefore, it is 'fertilizer' within the meaning of the said expression under the Fertilizer (Control) Order, 1985. 22. Under clause 2(h) of the Fertilizer (Control) Order, 1985, the term 'fertilizer' has been defined as under : "2(h) 'fertilizer' means any substance used or intended to be used as a fertilizer of the soil and/or crop specified in P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned to it under Fertiliser Control Order, 1985. The appellants' contention is that Zinc Sulphate is a fertiliser in common parlance and is a micro nutrients and is used in agriculture and even they sold the entire product to State Government for being supplied to the farmers that even by applying the common parlance theory, the product would be classifiable as fertilisers and the Notification mentions simply as a fertiliser and there is no condition for according the benefit of the Notification that Zinc Sulphate should be classifiable under Chapter 31 of the Central Excise Tariff Act, 1985 which deals with fertilisers. The appellants have relied on the decision in the case of Punjab Micro Nutrients Ltd. vs. Collector [1990 (48) E.L.T. 603 (Tri.-Del.)] in support of their contention that the benefit of exemption Notification No. 04/2006-CE dated 01.03.2006 is available for procuring Sulphuric Acid without payment of duty. The Tribunal in the order has held as follows:- " 4. We have carefully considered the submissions made by the learned counsel and the learned Departmental Representative. The question is whether the sulphuric acid used in the manufacture of zinc sulphate would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant growth and development but are required by plants in small quantities. Iron, zinc, manganese, copper, boron, molybdenum and chlorine fall in this category. It is seen from the "Handbook on Fertilizer Usage", brought out by the Fertilizer Association of India, New Delhi, that the distinction between nitrogen, phosphorus and potassium which are to be found in the major fertilizers and micronutrients, lies in the fact that nitrogen, phosphorus and potassium are used in large quantities by plants. These are, therefore, called major or primary nutrients. Calcium, magnesium and sulphur are required relatively in small but inappreciable quantities and are called secondary nutrients. Iron, zinc, manganese, copper, boron, molybdenum and chlorine are required by plants in small quantities for their growth and development. Hence these are referred to as micronutrients or trace elements. If nitrogen, phosphorus, potassium bearing products which are used for growth and development of plants are fertilizers, it stands to reason that micronutrient bearing products are also fertilizers. Both supply essential nutrients to plants, the former to a larger extent and the latter to a smaller extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to it under the Fertilizer (Control) Order, 1985". 3. Inasmuch as the zinc sulphate is classified under Chapter Heading 28 of the CETA, 1985, Revenue entertained a view that the same cannot be considered as fertilizers which are classifiable under Chapter Heading 31. Accordingly, they initiated proceedings against the assessee for denial of the benefit of Notification and consequent confirmation of demand. The said proceedings resulted in passing of the present impugned orders confirming demand and imposing penalties. As in one case, the Commissioner (Appeal) set aside the penalty, Revenue has filed the present appeal also. 4. The issue involved in all the appeals is as to whether the assessee is entitled to benefit of the Notification No. 4/2006-C.E. in respect of procurement of sulphuric acid without payment of duty, which is being used in the manufacture of zinc sulphate "fertilizer grade". Revenue's objection is that inasmuch as zinc sulphate is being classified under Chapter 28, the same cannot be held as fertilizers, which are classifiable under Chapter 31. 5. We find that the said dispute was the subject matter of the earlier decision of the Tribunal, though in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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