Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Rallis India Ltd. on 28 April, 2005
Equivalent citations: 2005(186)ELT382(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. In this appeal of the Revenue, the dispute relates to classification of what is called "Industrial Sludge". In the classification declaration filed by the respondents for the period 1995-96, they classified the product under Heading 31.05 of the CETA Schedule and claimed 'NIL' rate of duty under Notification No. 181/86-C.E., dated 1-3-1986. The department took the view that the goods did not satisfy the conditions for classification under Chapter 31 of the CETA Schedule. They issued a show-cause notice to the party proposing to classify the item under Heading 38.23 as "residual product of chemical or allied industries". This proposal was contested. The adjudicating authority held that the product was classifiable under Heading 38.23 (SH 3823.00) till 28-2-1997 and under SH 3824.90 from 1-3-1997. This decision was set aside by the Commissioner (Appeals), who accepted the claim of the party for classifying the goods under Heading 31.05 and for exemption under the aforesaid Notification. Hence the present appeal of the Revenue.
2. The rival entries are given below :
Heading Sub- Description of goods Remarks
No. heading
No.
(1) (2) (3) (4)
31.05 3105.00 Mineral or chemical fertilisers, con-
taining two or three of the fertilising
elements, nitrogen, phosphorous and
potassium; other fertilisers
38.23 3823.00 Prepared binders for foundry moulds For the
or cores; chemical products and period
preparations of the chemical or allied upto 28-2-
industries (including those consisting 1997
of mixtures of natural products), not
elsewhere specified or included; resid-
ual products of the chemical or allied in-
dustries, not elsewhere specified or in-
cluded.
38.24 Prepared binders for foundry moulds w.e.f.
or cores ; chemical products and 1-3-1997
preparations of the chemical or allied
industries (including those consisting
of mixtures of natural products), not
elsewhere specified or included; Re-
sidual products of the chemical or allied
industries, not elsewhere specified or in-
cluded
3824.10 - Phosphogypsum
3824.20 - Ready mix concrete
3824.90 - Other
3. The respondents are manufacturers of Gelatine. The manufacture of Gelatine starts with treatment of crushed bone with Hydro chloric Acid. The solids resulting from this treatment are taken to the gelatine production plant, while the supernatant liquid is led to the Phosphoryl plant where two products viz. Thosphoryl (A)' and 'Phosphoryl (B)' are manufactured. The residual products (effluents) from both the plants are drained into the Effluent Treatment Plant (ETP) where certain chemicals are added and the heavier solid particles resulting from this treatment are allowed to settle. After removing the supernatant liquid, the solids are transferred to the sludge filter unit. The filtered solids are collectively called "Industrial Sludge". According to the appellant, this product is classifiable as "residual product of chemical industry", whereas the respondents would classify it as "chemical fertilizer". Ld. DR and ld. Counsel have reiterated the respective positions. Ld. Counsel has also relied on certain test reports which include reports from Tamil Nadu Pollution Control Board, UPASI Tea Research Foundation and Rallis Agrochemical Research Station, each one indicating the presence of Nitrogen and Phosphorus along with certain other elements in a sample of the product. Ld. Counsel has also referred to the respondent's own "Sludge Analysis", which indicates presence of Phosphorus and Nitrogen in the product. Relying on these test results, ld. Counsel has argued that the goods in question can appropriately be classified as a "chemical fertilizer" containing two or three of the fertilizing elements, viz. Nitrogen, Phosphorus and Potassium. All samples of the product tested by various governmental and semi-governmental agencies were found to contain two fertilizing elements, Nitrogen and Phosphorus. Moreover, it is an admitted fact that the product is used as a fertilizer. Therefore, according to ld. Counsel, it would not be justifiable to place the product under the residual entry proposed by the department.
4. We have carefully considered the submissions. It is an admitted fact that the goods in question is a product of chemical processes. There is again no dispute of the fact that it can be, and is, used as a fertilizer. The Revenue would say that it has other uses also and, therefore, it cannot be classified as a fertilizer but the appellant has not specified as to the so-called "other uses". On the other hand, the respondents have consistently claimed that the subject goods were sold, during the material period, only to customers who used it as a fertilizer. They have also produced test reports from governmental and semi-governmental agencies indicating that the product contains both Nitrogen and Phosphorus,' two of the fertilizing elements mentioned in the description of the goods given under Heading 31.05. Apparently, the Revenue did not get any sample tested in their own chemical laboratory. The appellant has adduced no evidence to rebut the evidence produced by the respondents in support of their plea that "Industrial Sludge" manufactured by them during the material period contained Nitrogen and Phosphorus as fertilizing elements and were used by their customers only as "fertilizers". In the circumstances, we have to sustain the decision of the Commissioner (Appeals).
5. In the result, the Revenue's appeal is rejected.
(Operative part of the order was pronounced in open Court on 28-4-2005)