K. Prakash Anand, Member (T)

1. These are two matters in which the Government of India, Ministry of Finance, Department of Revenue have issued show cause notices under Section 36(2) of the Central Excises and Salt Act, 1944 for review of the Orders-in-Appeal No. 10/82 (C), dated 18-1-1982 and No. 73/82 (C), dated 11-5-1982 passed by the Appellate Collector of Central Excise, Madras in Appeals filed by M/s. Fertilizer and Chemicals Travancore Ltd., Udyogmandal. On the setting up of this Tribunal, these matters have been transferred here and are now being treated as appeals before us. Since both matters relate to the same issue, these are being disposed of by this common Order.

2. As per the show cause notices issued by the Central Government, the facts are that the respondents are manufacturing ammonium chloride of 99.8% purity. It is stated that this is intended for use as a chemical. However, from 5th July, 1974, this ammonium chloride had been cleared by the respondents under Item 14HH of the Central Excise Tariff as fertilizer. A classification list filed by the assessee to this effect had also been duly approved by the proper authority. On 4th April, 1981, a notice was issued to the assessee asking him to show cause as to why the impugned product should not be classified under Item 68 of the Central Excise Tariff. As a result of these proceedings, the Assistant Collector ordered that the goods in question were not fertilizers in view of the high purity and were correctly classifiable as industrial chemical under Item 68 of the Central Excise Tariff. The assessee went in appeal before the Appellate Collector of Central Excise, Madras who set aside the order of the Assistant Collector on the ground that the entry 14 HH of Central Excise Tariff did not make distinction between technical or chemical grades of ammonium chloride and fertilizer grade of the product. He noted that ammonium chloride was listed as fertilizer in the Fertilizer Control Order, 1957 and the Amendment Order of 1970. Further, ammonium chloride intended to be used in the manufacture of dry cell batteries, etc. was specifically exempted under Notification No. 164/69 dated 11-6-1969 subject to the following of procedure prescribed under Chapter X of the Central Excise Rules. Central Government, however, felt that Appellate Collector had failed to take into consideration the fact that in commercial parlance, ammonium chloride of 99.8% purity is not known as fertilizer but as industrial chemical used for specified industrial purposes. It also observed that the fact that ammonium chloride figured in Notification No. 164/69 did not mean that all grades of ammonium chloride were covered under Notification. For these reasons it appeared to the Central Government A" that it would be incorrect to classify impugned ammonium chloride as fertilizer.

3. Shri A.S. Sundar Rajan, the learned departmental representative has reiterated the view taken in the show cause notice to the appellants. He points out that the test report of the FACT Control Laboratory had shown that the ammonium chloride was of high technical purity. It was being cleared to industrial consumers as chemical and only a small percentage of the product was cleared as fertilizer. Therefore, whether one applies the test of marketing or actual use, the impugned goods cannot be classified as fertilizers covered by the exemption notification. Referring to the Glossary of Terms used in Fertilizer Trade and Industry IS 1304-1980 and the Handbook on Fertilizer Technology, he has pointed out that there is a clear distinction between pure ammonium chloride of technical grade which is used as chemical and ammonium chloride which is not of such high purity and used as fertilizer. The learned JDR has cited the decision of the Karnataka High Court in the case of Mysore Acetate and Chemical Co. Ltd. v. The Assistant Collector of Central Excise and Ors. 84(1) ECC 38 in which it was held that end use would finally deter