LexMADRAS FERTILIZERS LTD. versus ASSISTANT COLLECTOR OF CENTRAL EXCISE, MADRAS V DIVISION, MADRAS AND ORS.
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.. \.- / / MADRAS FERTILIZERS LTD. v. ASSISTANT COLLECTOR OF CENTRAL EXCISE, MADRAS V DIVISION, MADRAS AND ORS. JANUARY 20, 19'J4 [B.P. JEEVAN REDDY AND B.L. HANSARIA, JJ.] A B Central Excises and Salt Tax Act, 1944-Tari/f Item 14HH, First Schedule-Notification under R.8(1)-Exemption for mixed fertilizers ob- tnined with the aid of power and made of tWo or more fertilizers on all of C which excise or additional duty already paid-Held, ammonia not a fe11ilizer, its use in manufacture of the fertilizer takes it outside the exemption. Central Excises and Salt Tax Act, 1944-Tariff Item 14HH, First Schedule-Government order clarifying that chemical reaction in the D manufacture of mixed ferlilizer not relevant condition to deny exemp- tion-Matter remitted for allowing exemption if conditions in the notification fulfilled-Held, doe's not amount to an order granting exemption. Central Excise Rules-R.173-B(S)-Held, Assistant Collector has power under, to rectify e"or regarding rate of duty. E The appellants manufactured and sold mixed fertilizer under the trade name. They claimed exemption from excise duty under Notification 25/70 which exempted mixed fertiliurs falling under TI 14HH manufac- tured with the aid of power, from two or more fertilizers on all of which excise, or additional duty had already been paid. F The Assistant Collector, on a finding that the fertilizer in question was not a mixture of two or more fertilizers but of fertilizers and other ingredients, did not allow the exemption. He also held that ammonium phosphate, generated during the course of mixing of fertilizers, was a well G known fertilizer though not subjected to levy for practical reasons. On appeal, the Appellate Collector affirmed the order, and also observed that complex fertilizers obtained by chemical reaction could not come within the exemption. The Government of India allowed a revision petition filed by the H 189 190 SUPREME COURT REP.ORTS (1994) 1 S.C.R. A appellant and held that the Notification did not lay down any condition that the mixture should not be complex fertilizer obtained by chemical reaction. The matter was remitted, with the direction that exemption under the Notification be allowed if the conditions thereof were fulfilled. B The Assistant Collector, on 5 March 1976 extended the benefit to the appellant's product subject to the appellant paying the duty on the com- ponents. A few months later, realisi~g bis mistakei be issued a show cause notice on the grounds that urea was not used as a base fertilizer in the manufacture of the fertilizer in question; duty on urea was paid at the intermediary stage only to satisfy the condition of the Notification further, C the Notification did not contemplate formation of a third fertilizer •· ammonium phosphate; and no duty was paid on it, again, ammonia was cleared free of duty. After hearing the appellant, the Assistant Collector concluded that the fertilizer in question was not a mixture of fertilizer as contemplated by D the Notif1Cation. He also held that a chemical transformation took place which caused the original substances to lose their identity and get trans- formed into a new product. A Single Judge of the High Court allowed the writ petition filed by E the.appellant, on the ground that the Assistant Collector had denied the benefit on a ground specifically negatived by the Government of India. On appeal, the Division Bench held for the Revenue, that that bad not been the only ground, and that. Coromandel Fertilisers v. Union of India, con- cluded the issue against the appellant. F In the appeal before this court, the appellant Company contended that the Assistant Collector bad become funcflAs officio after passing ·the order dated 5 March 1976; that e\;en otherwise he had reit~rated the ground about chemical transformation which had been expressly negatived by government; that the order of the GOI being final, the Coromandel case G could not be invoked to reopen the case, and that the case was distinguish~ able anyway. It also contended that all the points bad been decided by the GOI iil the revision, and the Government order could not be re-agitated. Dismissing the appeal, this Court H ... ..,"""'.'..r· -~ # .... ~ -4." ~ HELD : 1. The order of the GOI deals with one aspect: 'th~t chemical ---f MADRAS FERTILISERS v. ASSTI. C.C.E. [B.P.J. REDDY,J.] 191 reaction or transformation, if any, ta
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