The Larger Bench of the CESTAT has on 12 December 2024 held that an assessee is eligible for benefit under Sl. No. 32 of Notification No. 4/2006-C.E., dated 1 March 2006 on procurement of sulphuric acid for manufacture of zinc sulphate (agriculture grade). Sl. No. 32 of the notification provided for nil rate of central excise duty on sulphuric acid used in the manufacture of fertilizers. The assessee was represented by Lakshmikumaran & Sridharan Attorneys here.
The Tribunal for this purpose was of the view that zinc sulphate (agriculture grade) is a micronutrient which is a fertilizer, and thus, irrespective of what is contained in the Explanation at Serial No. 35 of the notification and the fact that the said Explanation would not be applicable to Serial No. 32, benefit of nil rate of duty was available to sulphuric acid used in the manufacture of zinc sulphate (agriculture grade).
The Revenue department had relied upon an earlier CESTAT decision in the case of Jyoti Chemicals, which was maintained by the Supreme Court, to contend that zinc sulphate is not a fertilizer.
The Larger Bench, however, observed that the Tribunal in the Jyoti Chemicals decision had only rejected the contention that the Explanation contained in Serial No. 35 of the notification was applicable to the entry at Serial No. 32 and hence it was held that zinc sulphate is not a fertilizer. The LB noted that the contention that even otherwise zinc sulphate would be a fertilizer in terms of the common parlance theory was not raised in the memorandum of appeal in that dispute. Supreme Court’s decision in S. Shanmugavel Nadar v. State of Tamil Nadu [(2002) Supp 8 SCC 361], on the question of merging of orders, was relied upon by the Larger Bench here.
Holding zinc sulphate (agriculture grade) as fertiliser, the Larger Bench in Jyoti Chemicals and Fertilisers v. Commissioner relied upon the explanation of ‘fertiliser’ in the World Book Encyclopedia, and Tribunal decisions in Radhika Vitamalt Pvt. Ltd., Punjab Micro Nutrients, Himgiri Metals and India Phosphate and the CESTAT Larger Bench decision in P.I. Industries Limited.