Customs Duty Exemption on Fertilizer Import: CESTAT Remands case for Proper Interpretation of Notification on Tata Chemicals’ Claim [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently remanded a dispute concerning customs duty exemption claim made by Tata Chemicals Ltd. on the import of fertilizer and allied materials, holding that the benefit of exemption as claimed required to be interpreted properly as per the amended notification.

The dispute arose from 51 bills of entry filed between 1 March 2011 and 12 March 2012 in respect of imported consignments which the appellant had classified within Chapter 31 of First Schedule to Customs Tariff Act, 1975, and claimed exemption under Notification No. 4/2011-CE dated 1.3.2011.

The consignments included calcium nitrate, bentonite sulphur, mono potassium phosphate, potassium sulphate and NPK fertilisers. The original authority denied the exemption on the view that entitlement was limited to goods intended for use in manufacture of other fertilisers, and consequently demanded duty of ₹26,50,377 under Section 28, interest of ₹2,15,584 under Sections 28AB/28AA, and ordered confiscation of the goods valued at ₹21,64,24,656.63 under Section 111(o), while imposing penalty of ₹28,65,916.

Complete practical guide to Drafting Commercial Contracts, Click Here

Before the CESTAT, Viswanathan, Akhilesh Kangzia and Madhura Khandekar appeared for Tata Chemicals while Deputy Commissioner Ram Kumar appeared for the Revenue.

A Bench comprising C J Mathew, Member (Technical) and Ajay Sharma, Member (Judicial) examined the language of the exemption notification and the amendment history.

Complete GST Act & Rules with amendments made by financial bill,

The Bench observed that a plain reading of the amended notification renders goods in Chapter 31, except those specifically excluded to be eligible for nil rate of tax. The Bench noted that the exclusion is qualified by the phrase ‘clearly not to be used’, and therefore disentitlement must be shown by evidence making it unmistakably apparent that the imports were not for use in manufacture of fertilisers.

The Tribunal concluded that the lower authorities had proceeded on an impermissibly narrow scope of exclusion of the amended text.

Accordingly, CESTAT set aside the impugned orders and restored the show-cause notice and remanded the matter to the original adjudicating authority for fresh decision in light of proper interpretation of the exemption notification, as per the facts of the present case.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates