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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE VARADARAJAN
Madras Fertilisers Limited - Appellant
Versus
Assistant Collector of Central Excise, Madras - Respondent
Case No : Writ Petitions Nos. 152 and 455 of 1977
Decided On : 19 November 1979
CENTRAL EXCISE - EXEMPTION - MIXED FERTILISERS - NOTIFICATION NO. 25/70-C.E., DATED 1-3-1970 - WHETHER THE NOTIFICATION IS LIMITED TO MIXED FERTILISERS WHICH ARE MANUFACTURED WITH THE AID OF POWER EXCLUSIVELY FROM TWO OR MORE FERTILISERS - WHETHER THE NOTIFICATION IS APPLICABLE TO NPK COMPLEX FERTILISERS MANUFACTURED BY THE PETITIONERS - WHETHER THE ASSISTANT COLLECTOR OF CENTRAL EXCISE HAS JURISDICTION TO PASS THE IMPUGNED ORDER AFTER THE MATTER HAD BEEN CONCLUDED BY THE REVISIONAL ORDER DATED 18-2-1976 OF THE CENTRAL GOVERNMENT - WHETHER THE WRIT PETITIONS ARE MAINTAINABLE.
Fact of the Case:
The petitioners are manufacturers of Fertilizers liable for excise duty at 15 per centad valoremunder Item No. 14-HH of the First Schedule to the Central Excises and Salt Act, 1944. They own three units in the same factory at Manali the first designed to produce Ammonia, the second to produce Urea and the third to produce Complex Fertilizers. The distribution of Fertilisers is governed by the Fertiliser Control Order, 1957. The components of the NPK Complex Fertilisers, namely NPK 14-28-14 and NPK 17-17-17- according to the petitioners are Urea manufactured by the petitioners' factory on which excise duty is paid at 15 per centad valoremand Muriate of Potash imported from abroad on which countervailing duty is paid under Section 2A of the Indian Tariff Act. By the Notification No. 25/70-Central Excises, dated 1-3-1970 the Central Government exempted mixed fertilisers falling under Item 14-HH of Schedule I manufactured with the aid of power from two or more fertilisers on all of which appropriate amount of duty of excise or, as the case may be, additional duty under Section 2A of the Indian Tariff Act, 1934, has already been paid, from the whole of the duty of excise leviable thereon. The Explanation to that notification states that for the purpose of the notification 'mixed fertilisers' means mixtures of fertilisers containing more than one nutrient (nitrogen, phosphate or potash) and does not include single nutrient fertilisers like super phosphate manufactured from rock phosphate.
Finding of the Court:
1. The notification is not limited to mixed fertilisers which are manufactured with the aid of power exclusively from two or more fertilisers. 2. The notification is applicable to NPK complex fertilisers manufactured by the petitioners. 3. The Assistant Collector of Central Excise had no jurisdiction to pass the impugned order after the matter had been concluded by the revisional order dated 18-2-1976 of the Central Government. 4. The writ petitions are maintainable.
Issues: 1. Whether the notification is limited to mixed fertilisers which are manufactured with the aid of power exclusively from two or more fertilisers? 2. Whether the notification is applicable to NPK complex fertilisers manufactured by the petitioners? 3. Whether the Assistant Collector of Central Excise has jurisdiction to pass the impugned order after the matter had been concluded by the revisional order dated 18-2-1976 of the Central Government? 4. Whether the writ petitions are maintainable?
Ratio Decidendi: 1. The notification does not lay down any condition that there should be only physical action without chemical reaction and it only requires that the mixture can be obtained with the aid of power and the mixed fertilisers should contain not more than one nutrient. 2. The notification clearly states that the exemption under the said Notification is allowed to the petitioners if the conditions thereof are fulfilled. 3. The order dated 18-2-1976 of the Central Government is a final order allowing the exemption to the petitioners subject to the conditions mentioned therein and referred to in the letter date 5-3-1976 of the Assistant Collector of Central Excise. 4. The petitioners are entitled to invoke the jurisdiction of this court under Article 226 of the Constitution of India for quashing the impugned order.
Final Decision: Both the writ petitions are allowed with costs.
These two writ petitions have been filed by the Madras Fertilisers Ltd. against (1) The Assistant Collector of Central Excise, Madras, (2) The Superintendent of Central Excise, Madras and (3) the Union of India, under Article 226 of the Constitution of India-W.P. No. 152 of 1977 for the issue of awrit of certiorarior any other appropriate writ or order calling for the records relating to the proceedings bearing C. No. V/14/HH/3/2/74-VC of the Assistant Collector of Central Excise and quashing the order dated 7-1-1977 passed by him therein, and W.P. No. 455 of 1977 for the issue of a writ ofmandamusor any other appropriate writ or order directing the Assistant Collector of Central Excise to refund the excise duty paid on Complex Fertilizers-NPK Mixtures-manufactured by the petitioner company up to 5-3-1976 after adjusting the duty payable on the Urea used in the manufacture of the Complex Fertilizers and the credit taken for the countervailing duty paid on the imported Muriate of Potash used in the manufacture of the Complex Fertilizers.
2.The petitioners are manufacturers of Fertilizers liable for excise duty at 15 per centad valoremunder Item No. 14-HH of the First Schedule to the Central Excises and Salt Act, 1944. They own three units in the same factory at Manali the first designed to produce Ammonia, the second to produce Urea and the third to produce Complex Fertilizers. The distribution of Fertilisers is governed by the Fertiliser Control Order, 1957. The components of the NPK Complex Fertilisers, namely NPK 14-28-14 and NPK 17-17-17- according to the petitioners are Urea manufactured by the petitioners' factory on which excise duty is paid at 15 per centad valoremand Muriate of Potash imported from abroad on which countervailing duty is paid under Section 2A of the Indian Tariff Act.
3.By the Notification No. 25/70-Central Excises, dated 1-3-1970 the Central Government exempted mixed fertilisers falling under Item 14-HH of Schedule I manufactured with the aid of power from two or more fertilisers on all of which appropriate amount of duty of excise or, as the case may be, additional duty under Section 2A of the Indian Tariff Act, 1934, has already been paid, from the whole of the duty of excise leviable thereon. The Explanation to that notification states that for the purpose of the notification
"mixed fertilisers' means mixtures of fertilisers containing more than one nutrient (nitrogen, phosphate or potash) and does not include single nutrient fertilisers like super phosphate manufactured from rock phosphate.
4.The petitioners requested the Assistant Collector of Central Excise by their letter dated 21-12-1972 for permission to clear NPK Complex Fertilizers manufactured by them subject to payment of excise duty on the urea portion of the NPK at the relevant date and requesting him to confirm their understanding of the said Notification No. 25/70-C.E. that they could clear NPK without payment of excise duty by paying excise duty on the urea consumed in the manufacture of NPK and not claiming refund of countervailing duty paid on muriate of potash. The Assistant Collector of Central Excise negatived the petitioners' request by his letter dated 16-7-1974 observing thus :" *
On a plain construction, it would appear that this notification is limited to mixed fertilisers which are manufactured with the aid of power exclusively from two or more fertilisers whereas in the premises of M/s. Madras Fertilisers Ltd., the manufacture of NPK Mixture is from the following:
i. Urea,
ii. Muriate of Potash,
iii. Phosphoric acid,iv. Ammonia,
v. Fillers, and
vi. Coating agents.
So the manufacture is not from two or more fertilisers but from the fertilisers and other ingredients. A rigid interpretation of the notification would therefore imply that NPK which is being manufactured from:
"item (i) and (ii) and other ingredients is, therefore, not covered by the notificationibid. Apart from the above ammonium phosphate which goes into the
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