TMI Blog1986 (7) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... said, is not manufactured in India. At the material time an importer of Mono-Ammonium Phosphate was liable to pay customs duty as per sub-item 3 of Item 31.02/05 of the First Schedule to the Customs Tariff Act, 1975. The rate of duty that was applicable to Mono-Ammonium Phosphate was 60% ad valorem. In addition, an auxiliary duty at the rate of 15% ad valorem was also applicable at the relevant time. 3. The Central Government issued a Notification No. 178/76-Cus., dated 2-8-1976 as follows : G.S.R. 547 (E) - In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts AMMONIUM PHOSPHATE falling within Chapter 31 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for use as manure, from the whole of the duty of customs leviable thereon which is specified in the said First Schedule : Provided that in respect of any consignment of ammonium phosphate imported under cover of a claim for exemption from duty in pursuance of the provisions hereof, the importer shall execute a bond in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khapatnam, allowed clearance of the consignment on payment of auxiliary duty at 5% ad valorem and additional (countervailing) duty at 7.5% ad valorem and on the execution by the appellant of a bond thereby undertaking, inter alia, to produce before the proper officer within three months from that date a clarification from the Ministry of Finance to the effect that the Notification No. 178/76-Cus. would also be applicable to the consignment imported for use as an intermediate in the production of complex fertilisers which would be used as manure. In the event of failure to comply with the conditions of the bond, the appellant undertook to pay the differential amount to duty. 7. On August 11, 1979, the appellant wrote a letter to the Ministry of Finance, Government of India, seeking extension of the benefit of the Notification No. 178/76-Cus. to the consignment in question. No reply to the said letter was received by the appellant from the Ministry. 8. In the meantime, the Assistant Collector of Customs, Visakhapatnam, issued a notice dated November 19, 1979 to the appellant calling upon it to show cause why duty amounting to ₹ 60,34,419.56, which was short-levied, should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Di-Ammonium Phosphate having the specifications mentioned in part A of the Table below and imported by the Central Government for use as manure or in the production of complex fertilisers; and (b) Ammonium Nitro-Phosphate having the specifications mentioned in Part B of the said Table and imported by the Central Government for use as manure, from payment of the whole of the duty of customs leviable thereon which is specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) : Provided that an undertaking is given, at the time of importation of Di-Ammonium Phosphate for production of complex fertilisers, agreeing to pay, on demand, in respect of such quantity of Di-Ammonium Phosphate as is not proved to the satisfaction of the Assistant Collector of Customs to have since been used for the said purpose, an amount equal to the duty of Customs leviable thereon under the said First Schedule on such quantity, but for this exemption. 11. It appears from the above Notification No. 177/76-Cus. that Di-Ammonium Phosphate when imported into India for use as manure or in the production of complex fertilisers would be exempt from payment of customs duty leviable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Attorney General has, however, made an endeavour before us to prove that the mixture of Mono-Ammonium Phosphate, Urea and muriate of Potash is not a physical or mechanical mixture, but when these three chemicals are mixed together, a complex fertiliser, which is a new chemical compound, comes into existence. The chemical compound of the complex fertiliser is known as N.P.K. in which the percentages of nitrogen, phosphorus and potassium are different from the percentages of these elements in Mono-Ammonium Phosphate. Moreover, the complex fertiliser is granular in form whereas Mono-Ammonium Phosphate is a powder. It is submitted that in the new compound or the complex fertiliser (N.P.K.), Mono-Ammonium Phosphate loses its physical and chemical properties or characteristics. Accordingly, it is submitted by the learned Attorney General that as Mono-Ammonium Phosphate is lost in the chemical compound that is produced, it cannot be said that it has been imported into India for the use of the same as a manure and, as such, it is exempt from payment of customs duty under the Notification. 14. The point that by virtue of the mixture a new chemical compound comes into existen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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