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Regarding urea imported for the production of complex fertilizers - Levy
of concessional customs duty
Circular No. 49 dated 10th August 1999
I am directed to
invite your attention on the above subject and to say that a doubt has arisen
whether urea imported for the production of complex fertilizers should qualify
for concessional duty of 5% or should it be charged to duty at the tariff rate
of 35%. The doubt has arisen particularly because, the entry against S.No. 54 of
the Table annexed to Notification No. 20/ 99-Cus. dated 28/ 2/ 99 reads
"urea, for use as manure". A view has, therefore, been expressed that
concessional duty will not ba available when urea is imported for the production
of complex fertilizers. This view draws support from entry at S.No. 56 of the
Table annexed to the said notification, which prescribes concessional duty of 5%
for Muriate of potash, when imported for use as manure or for the production of
complex fertilizers. The contrary view is that complex fertilizers are also
manure and, therefore, urea imported for the production of complex fertilizers
should also quality for concessional duty of 5% for Muriate of potash, when
imported for use as manure or for the production of complex fertilizers. The
contrary view is that complex fertilizers are also manure and, therefore, urea
imported for the production of complex fertilizers should also quality for
concessional duty of 5%.
2. The
matter has been examined by Board. It is seen that the word 'manure' has not
been defined in the notification referred to above. Therefore, reliance has to
be placed on the dictionary meaning. In the Concise Oxford Dictionary, manure
has been defined as 'animal dung used for fertilizing land' and 'any compost or
artificial fertilizer'. Fertilizer has been defined as a 'chemical or natural
substance added to the soil to make it more fertile'. In the Webster's
Encyclopaedic Abridged Dictionary, manure has been defined as 'any substance
used to fertilize the soil esp. a commercial or chemical manure'. In the fashion
the words 'manure' and 'fertilizers' have been described in the Dictionaries, it
is clear that both manure and complex fertilizers more or less refer to the same
thing and both are used for fertilizing the soil. It, therefore, follows that
urea imported for the production of complex fertilizers would get the same
treatment i.e. concessional duty of 5% as urea imported for being used as
manure.
3. In
case of Gujarat State Fertilizers Company vs. Collector of Central Excise [1997
(91) ELT 3], the Hon�ble Supreme Court had examined the scope of notification
Nos. 75/ 84-CE dated 01.03.84 and 40/ 85-CE dated 17/ 3/ 85 and had held that
raw naptha and ammonia used for the manufacture of molten urea would qualify for
concessional rate of excise duty though the final product in which molten urea
was used is melamine, a non-fertilizer. In the present case, the issue pertains
to urea imported for the production of complex fertilizers, which is nothing but
a kind of manure as described above. After examination of the issue in all its
aspects, Board has felt that concessional duty of 5% cannot be denied to urea
when it is imported for the production of complex fertilizers.
4. Pending
consignments lying at the ports/ ICDs, if any, may be cleared on the basis of
the above instructions. In case there is any difficulty in implementing the
aforesaid instructions, the same may please be brought to the notice of the
Board at an early date.
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