1. This is an appeal against Order-in-Original No. 7/99, dated 9-3-1999 passed by Commissioner of Customs, Vizag confirming duty demand of Rs. 75,800/- along with interest under Section 28AB of Customs Act, 1962 and imposing penalty of Rs. 75,800/- under Section 114A of the Customs Act regarding import of anhydrous ammonia vide Bill of Entry No.641/17-3-1995 on the ground that the value thereof had been misdeclared by including additional freight to the tune of US $12 per M.T.2. Heard Shri G. Prabhakar Sastry, ld. Advocate for appellants who submits that the question of misdeclaration of additional freight, etc.
would only be applicable for consideration if there was any duty of Customs or additional duty of Customs payable on the goods imported. It is his contention that in view of Exemption Notification No.24/94-Cus., dated 1-3-1994 as amended by 11/97, dated 1-3-1997 clearly exempts these goods from payment of duty as the same were for manufacture of ammonium nitrate which has been classified by the Central Excise authorities under Chapter 31 of the Central Excise Tariff Act as a fertilizer. Merely because the said ammonium nitrate has been cleared on payment of duty under Chapter 31 of the Central Excise Tariff for use other than as fertilizer, i.e. for use of manufacture of explosives, that by itself would not disallow the exemption under the Customs Notification because the, said notification did not prescribe any end use of the fertilizers so manufactured. In this connection, he cites the case of Gujarat State Fertilizer Co. v.C.C.E. as in 1997 (91) E.L.T. 3 (S.C.) wherein Hon'ble Apex Court while considering the scope of Notification No. 75/84-C.E., dated 1-3-1984 and 40/85-C.E., dated 17-3-1985 had held that since there" was no end use condition in the notification, therefore even if the molten urea is used in the manufacture of melamine, the exemption in the said notification would not be deniable. He submits that in this case, since their end product has actually been classified and assessed to duty as fertilizer under Chapter 31, therefore the same principle would apply in their case and the Customs exemption to fertilizer for the imported raw material would not be denied merely because the end use was something other than fertilizers. He submits that the ratio of this judgment is applicable in this case. He also cites the case of Steel Authority of India Ltd. v. C.C.E. as in 1997 (89) E.L.T. 71 (T).
wherein again it has been held that it was not necessary to prove that ammonium nitrate manufactured and cleared by the party was actually used as a fertilizer by their customers as such a condition was not contained in the exemption notification under consideration. Ld.
Advocate further submits that the wordings of the Customs notification as well as the Central Excise notification considered in this case are almost identical inasmuch as that the exemption is contained to any raw material used in the manufacture of fertilizer. There is no other end use condition in either of these notifications. Therefore, the ratio of this decision is also applicable to the facts of this case.
3. Heard Shri S. Kannan, ld. DR who reiterates the Order-in-Original.
He submits that initially issue was one of alleged under-valuation of the imported goods and the defence of the appellants is on a different issue, i.e. now they challenge the assessment of the goods at the time of import. This is a belated argument which is more of a point of law than a point of fact. He submits that ammonium nitrate was manufactured by the appellants, it was not necessarily follow that they manufactured fertilizer as the same are exclusively cleared only for manufacture of explosives and that particularly of ammonium nitrate manufactured by them is pertaining to the further manufacture of explosives and not suitable for use as a fertilizer.
4. At this point ld. Advocate also counters that the clarification issued to the ld. Commissioner by Ministry of Finance, Department of Revenue (Tariff Unit) vide their letter dated 10th August, 1998 have clearly informed the said Commissioner that Ammonium Nitrate in prilled form would be extended the benefit of Notification No. 11/97, dated 1-3-1997. This ruling is binding on the Commissioner. He further submits that there can be no dispute that the end product manufactured is classified as fertilizer under Chapter 31 of the C.E. Tariff inasmuch as that ammonium nitrate in any form, pure or impure is covered therein by the Tariff note. It would therefore be judicially incorrect to hold that while under the Central Excise Tariff they were required to pay duty on the product as fertilizers, whereas benefit of exemption for the raw material imported is denied on the ground that the end product manufactured is not fertilizer. This is particularly so because both the Tariffs are based on the HSN.5. We have considered the rival submissions and records of the case. We have also perused the exemption notification of Customs noted above. We find that the said notification exempts the product imported if the same is to be used for the manufacture of fertilizers. It is not disputed that the prilled ammonium nitrate manufactured by them has been classified by the jurisdictional Central Excise authorities under Chapter 31 of the Central Excise Tariff Act as fertilizer and that it has paid duty before it was cleared from the factory premises. We have also seen the two decisions cited above namely the decision of the Hon'ble Apex Court in the case of Gujarat State Fertilizer Company and that of the Tribunal in the case of Steel Authority of India Ltd. supra. On a careful consideration, we find that the same principle of interpretation of similar notification is evolved in both these decisions. The principle upheld is that when there is no explicit end use condition mentioned in an exemption notification, then more than that cannot be read into it. In the present case it is clear that the Customs exemption was available to the raw material imported provided it was used in the manufacture of fertilizer. There is no condition in the said notification that what was manufactured should also be cleared for use as fertilizers only. That what was manufactured is fertilizer is abundantly clear from Central Excise Jurisdictional Office classifying the same under Chapter 31 of the Central Excise Tariff Act as fertilizer and insisting on a payment of duty thereupon before it is cleared to the consumers. We find substantial force in ld. Advocate's argument that if the Central Excise Tariff Act has charged duty on the end product as fertilizer under Chapter 31, then it would not be correct to deny benefit of the exemption available to fertilizers on the raw material imported under the said Customs Notification.
6. In view of the aforesaid analysis and respectfully applying the ratio of the two decisions cited above, we set aside the Order-in-Original and allow the appeal.