‘Natural Rock Phosphate’ Imported Goods are Not considered as ‘Fertilizers’ under FCO and Ineligible to Claim Exemption of SAD under Exemption Notification : CESTAT [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the natural rock phosphate of imported goods is not considered fertilizers under Food Control Order (FCO) and ineligible to claim exemption of Special Additional Duty (SAD) under exemption notification. 

Sterlite Industries Ltd, the appellant assessee was engaged in the import of ‘Rock Phosphate’ classifying the goods as natural Calcium Phosphate’ which attracts Basic Customs Duty (BCD) of 2.5% and special Additional Duty (SAD) of 4% and the assessee claimed total duty exemption for Special Additional Duty (SAD) vide Customs Exemption Notification which was applicable for fertilizer or raw materials/inputs for the manufacture of fertilizers.

The assessee appealed against the order passed by the Commissioner of Customs for rejecting the claim of exemption for special additional duty. 

G. Krishnamurthy, the counsel for the assessee contended that the goods imported were ‘Rock Phosphate’ which was usually called ‘Natural Calcium Phosphate’, and claimed the exemption as inputs for the manufacture of fertilizer. 

Further submitted that the Rock Phosphate was very much essential for the continuous running of the appellant's plant as Sulphur produced during copper manufacturing cannot be let out into the environment and must be used for producing sulphuric acid which in turn was used for making phosphoric acid. Further, these phosphoric acids had to be cleared by the fertilizer industries. 

N. Sathya Narayanan, the counsel for the department relied on the decisions made by the lower authorities and contended that the rejection of the claim of exemption by the Commissioner of Customs was as per the law and liable to be sustained. 

The Bench observed that the fertilizers and all inputs and raw materials for the manufacture of fertilizers granted exemption from SAD, but for ‘rock phosphate’ to qualify the definition of ‘fertilizer’, FCO alone was the source and it was admitted that the product namely ‘Rock Phosphate’ does not qualify the specification required for fertilizer and when the product also not imported for manufacturing fertilizer. 

The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the goods imported are not eligible for the exemption of Special Additional Duty as per the notification while dismissing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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