TMI Blog1983 (4) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the year 1973, they started crushing of the rock phosphate mine, and marketed the same as mineral fertilisers. 3. Sometime in May 1975, they addressed a letter to the Superintendent, Central Excises, Dehra Dun for clarification as to whether their preparation of the fertilisers, the process whereof was explained, attracted the provisions of excise laws, including obtaining of licence and payment of excise duty and it was on this enquiry that the concerned Superintendent of Excise intimated to them that rock fertilisers fell under Tariff Item 14HH, and the same was excisable, as such. They were also advised by means of subsequent letter dated 28/30-6-1975 to obtain a licence, further reiterating the stand that excise duty was payable on this product known as Rock Phosphate, including all past clearances and the appellant was directed to make a note of the said fact and proceed accordingly. This correspondence was followed by a notice of demand dated 14-9-1977, revised subsequently by means of notice dated 27-12-1977, whereby the appellant was called upon to show cause as to why duty calculated at ₹ 35,04,904.44 be not paid, which calculation was made on the basis of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this provision cannot be made applicable to them. They also filed two statements showing the production and clearance of ROM and ground material for the year 1971-72 to 1975-76. 5. The Assistant Collector, after considering all the contentions, raised by the appellant held the view that on plain reading of Tariff Entry 14HH which took in its ambit Fertilizers : all sorts , the appellant s contention that the product marketed by them was natural mineral fertiliser not chemically treated, was not relevant because according to the specifications as given in the Fertilizer (Control) Order, 1975 and Amendment Order of 1970, which laid down certain specifications, chemical treatment was not a necessary requirement in order to qualify for being classified as fertilizer. He also rejected the appellant s plea that this rock phosphate fertilizer was not a fertilizer for the reason that it could be used in special type of soils, as no such distinction had been made in the Tariff. He also found it to be not practical at that stage to verify the appellant s assertion as to the quantity truned out or marketed by them or alleged losses suffered in storage, transit, handling, clearance, et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accordingly. 7. The appellant still felt aggrieved by this order despite the partial relief having been granted and took the matter in revision before the Central Government, pleading that they were a Government of India Undertaking, and engaged in mining and marketing of phosphorite from Mussoorie-Phosphorite deposits and they had started crushing activity only from the year 1973. According to them, to be classified as a fertilizer, the Government of India under the Fertilizer (Control) Order, 1975 have laid down that rock phosphate should satisfy the conditions specified in the Fertilizer (Control) Order, 1975, as to fineness in order to be treated as a fertilizer covered under Item 14HH of the C.E.T. for the purposes of duty and that in this view of the matter, the run of mine was not liable to duty of central excise and that it was not covered even after Ist March, 1975 under Entry 68 of C.E.T., inasmuch as the levy of duty of central excise was only on goods, produced in a factory. And as such rock of mine , in its virgin form, was not leviable to excise duty. They gave details of the quantity that had been so cleared without being subjected to any process of crushing or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se while bringing about an amendment in the rule, Section 6 of the General Clauses Act could not be invoked to protect action under the amended or repealed rules. They thus prayed that entire demand be quashed, and that, in any case, no demand covering the period beyond six months was sustainable, so preceding the date of the first notice issued on 14-9-1977. 10. On the date of first hearing of the appeal, which was 4th March, 1983. Shri S.P. Kampani, Consultant, appeared for the appellant alongwith Mr. Singh, General Manager of the Unit and submitted the same contentions, as set out in the grounds of appeal by laying emphasis on the fact that mere crushing of the rock phosphate into powdered form or seiving thereof to bring them to the required fineness did not involve any manufacturing activity, which postulated that some chemical change is brought about in the articles. He accordingly contended that goods could not be characterised as fertilizers within the meaning of Item 14HH of CET, inasmuch as mere physical activity of powdering the rocks did not entail any chemical treatment, and being the product of the mines they are to be treated as excluded from this Tariff Entry; be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, and ceased to be a relevant consideration. He placed reliance in support of this contention on a Division Bench Authority of the Bombay High Court in the case of Kores (India) Limited v. Union of India and others, reported in 1982 E.L.T. 253 (Bom.) laying down that if the Parliament had specifically included a particular product in the Schedule to CET, its validity cannot be questioned on the ground that such product did not involve manufacture. 14. Shri Tayal further countered the argument that `manufacturing was a necessary requirement in order to treat the goods as excisable and in that connection, he referred to a Division Bench authority of Delhi High Court in the case of Hyderabad Asbestos Cement Products Ltd. and another v. Union of India others (1980 E.L.T. 735) wherein it was held, that the product known as `asbestos fibre , prepared after powdering asbestos rocks would attract excise duty for the reason that asbestos rocks are not saleable as such, and it is only when the detailed process of manufacture has been gone through that asbestos fibre is obtained, which is different and distinct from asbestos rock, on which the Legislature imposed the duty of excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not amount to excisable goods as no manufacturing activity was involved. 18. We have, no doubt, been made aware of a Tribunal decision (Special Bench B) in this regard to support Appellant s contention which happened to be in this very appellant s case with reference to another product in another region. But on going through the judgment, copy where of has been furnished by the appellant, we find that the emphasis in that case was on the fact that the goods having been treated to be falling under residuary Tariff Entry No. 68, which were not produce of the factory as contemplated in the Factories Act, and being a product of the mine were excluded from the definition thereof and thus not being goods as produce in a factory, they could not be treated as excisable, and while upholding this contention, it was observed in passing that mere `crushing did not amount to manufacture as defined in Section 2 (f) of the Central Excises Act. 19. We, however, find that on the admitted facts of the case before us, the process which has been described, namely of breaking of the rocks into small pieces and then powdering them and then seiving them in specified meshes and bring them to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted. It is only after the process of breaking, powdering, seiving and bringing it to a specified fineness that it becomes fit for use as a fertiliser, and is publicised as a fertiliser specifically brought under the Fertilizer (Control) Order. It is also pertinent to note that the Appellate Collector has given partial relief to the appellant by taking out the `run of mine in its virgin form from liability to excise duty. The plea in the appeal in respect thereto is, therefore, manifestly redundant as what has been held to be excisable is only this finished product after undergoing various processes, and which is marketed as a phosphatic or mineral fertiliser. 23. We have, therefore, no hesitation in upholding the Appellate Collector s order that this product known as Mussoorie Phos which is the trade name given to the rock phosphate and which is being publicised as a fertiliser, is to be treated as such within the meaning of Tariff Entry 14HH. 24. This would be so, in spite of the argument that Natural Animal fertiliser are excluded from this entry when not chemically treated because we find the absence of a , as pointed out by the Senior Departmental Representative t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not cover these fertilisers and they ought to be treated as fertilisers, particularly when this Entry 14HH is of wide amplitude taking in its purview fertilisers of all sorts. 28. Before parting, we would also like to dispose of an interesting point, introduced in rejoinder arguments by Shri Luthra, Group General Manager of the appellant-company, by reference to research contained in a volume published by Geological Survey of India, that the rock phosphates have also their origin to bones or fossils of dead sea animals and taking that source of these rock phosphates, these could also be termed as natural animal fertilisers . We are afraid that it is not possible to accept such a farfetched argument. We draw support for this view from observations of their Lordships of the Supreme Court, made in the case of Madras Rubber Factory Ltd. v. Union of India others (A.I.R. 1977 S.C. 597) emphasising that once the articles are in circulation and come to be described and known in common parlance then there is no difficulty for statutory classification under particular entry. Their Lordships further observed that Courts are not required to consider the history and chemistry of a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appellant s contention that Rule 10A had been wrongly invoked by the Appellate Collector, has substance because it has been categorically held by Hon ble Supreme Court in the case of M/s Rayala Corporation (P) Ltd. v. Director of Enforcement, New Delhi (A.I.R. 1970 S.C. 494) that proceedings initiated after repeal of some rules cannot be sustained. It is a matter for judicial notice that Rule 10A was repealed with effect from 6-8-1977. It is also on record that the notice to show cause was issued on 14-9-1977. In view of the Supreme Court authority referred to above and cited by the learned Consultant for the Appellant, we hold it to be a case where Rule 10A has been wrongly invoked by the Appellate Collector. We also find that by taking resort to Rule 10A, the Appellate Collector impliedly conceded the contention of the appellant that action could not be taken under Rule 9(2) for the reason that there was no clandestine or suppressions removed and that it was a case of bona fide belief that the product was not excisable. This stand of the appellant about applicability of Rule 9(2) of the Central Excise Rules is also fortified by Supreme Court judgment in the case of N.B. Sanjana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision it would be appropriate to set out the relevant portions of the judgment :- As regards the third point relating to the limitation, we do agree that Section 6 of the General Clauses Act would not be applicable to the subordinate legislation, namely, rules, regulations etc. (Re : Rayala Corporation v. Director of Enforcement AIR 1970 S.C. 494 P. 503). However, apart from the $F1 Decision of the Supreme Court in the State of Punjab v. Mohar Singh, AIR 1955 S.C : ___but when the repeal is followed by fresh legislation on the same subject, the court would undoubtedly have to look to the provisions of the new Act but only for the purpose of determining whether they indicate a different intention. 2. Decision of the Supreme Court in the State of Orissa v. M.A. Tulloch Co., AIR 1964 S.C. 1284 : ___ The principle on which the saving clause in Section 6 of the General Clauses Act is based is that every later enactment which supersedes the earlier one or puts an end to an earlier state of law is presumed to intend the continuance of rights accrued and liabilities incurred under the superseding enactment unless there were sufficient indications express or implied in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find anything in the amending notification to show any intention to destory them. Even if it is taken that the rules are partly procedural, in so far as the amendment would have the result of making demands which otherwise be in order, time-barred, as soon as the amendment comes into force, reliance can be placed on the Full Bench Judgment of the Rajasthan High Court in Government of Rajasthan v. Sangrami Singh - AIR 1962, Raj. 43 that when the remedy to enforce a vested right is altogether barred on the date when the new law comes into being without providing any breathing time to a litigant then the remedy must continue to be governed by the old law of limitation. If a right had vested in the Government to recover dues short levied or erroneoulsy refunded within one year prior to 6-8-1977, both the repealed Rules 10 and 173J would be available in respect of rights, obligations and liabilities acquired, accrued or incurred under the two rules. Thus prior to 6-8-1977, the Government s right to recovery of dues short levied in respect of excisable goods specified under Rule 10 read with Rule 173J could be executed within one year from the date on which the duty was paid, or adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -9-1977, i.e. after substitution of Rule 10 as it stood before 6-8-1977 by a fresh Rule 10, in so far as it seeks to recover Government dues which arose in a period prior to 6-8-1977, i.e. the date of substitution of the Rule, the time-limit applicable would be one year as was the case in Rule 10 read with Rule 173J prior to 6-8-1977. In this view of the matter I hold that the Central Excise authorities are entitled to recover the excise duty with reference to Item 14HH of the Central Excise Tariff on the product known as rock phosphate (Mussoorie-Phos) for the period of one year preceding the date of the notice, namely, 14-9-1977. The appeal is accordingly allowed to this limited extent. EDITOR S COMMENTS : On the question of time-bar the majority decision seems to be more correct as it is based on the direct authority of the Supreme Court in the case of Rayala Corporation v. Director of Enforcement, AIR 1970 S.C. 494 which was subsequently endorsed in the case of Lennart Schussler v. Director of Enforcement, AIR 1970 S.C. 549 and was also followed in a Central Excise case by Allahabed High Court reported in 1982 ELT 201. The Supreme Court of India and various Indian High ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
