Fertiliser units entitled to total duty exemption: HC

Tag : Superphosphate
Corporate - Courts/Legal Issues
Industry & Economy - Excise and Customs
Agri-Biz & Commodities - Fertilisers
States - Tamil Nadu
Fertiliser units entitled to total duty exemption: HC
Our Legal Correspondent
Chennai, July 30 The Madras High Court has held that CoimbatorePioneer Fertilizers Ltd is entitled to total exemption from paymentof customs duty on imported steam turbine, and directed the UnionMinistry of Chemicals & Fertilizers to treat the machine asfalling under Entry 261, Chapter 98.01(i) of the First Schedule toCustoms Tariff Act, 1975.
Mr Justice K. Chandru, while allowing a writ petition of thecompany challenging the order dated July 7, 1999 of the Ministry(1st respondent) refusing to grant an essentiality certificate tothe petitioner so as to be eligible for duty exemption, set asidethe said order. If the petitioner had already paid any duty forimporting the said steam turbine, the same should be refunded tothem.
The petitioner, producing superphosphate, planned to doublecapacity to 80,000 tonnes annually, with an investment of Rs 215lakh. It applied to the Ministry for claiming total exemption frompayment of customs duty for the steam turbine to be imported fromGermany.
But the application was rejected on the ground that according tothe Government’s policy, captive power plants to be installedin fertiliser plants would be liable for customs duty.
The petitioner submitted that either the Ministry treatsteamturbine required by petitioner as part of the expansion of itsfertiliser plant, or it should be treated as a captive power plant.
In the present case, the petitioner’s expansion projectincluded steam turbine which was an integral part of the fertiliserproject. As such, the petitioner was entitled for total exemptionfrom duty.
Quoting a judgment of the Supreme Court in Zuari Industries Ltd vsCommissioner of Central Excise & Customs [2007 (5) SCALE 153],the Judge said that even before deciding the issue, the sponsoringMinistry consulted the Dept of Revenue and did not take intoaccount relevant factors and merely went by the advice of theRevenue deartment.
In the light of the above, the impugned order of the 1st respondentwould have to be necessarily set aside. Accordingly, the writpetition was allowed, and the impugned order would stand set aside.
The respondent was directed to grant the petitioner total exemptionfrom payment of customs duty in respect of the steam turbineimported by treating same as falling under Entry 261 of Chapter98.01.

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