The Hindu Business Line : Fertiliser units entitled to total duty exemption: HC

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Fertiliser units entitled to total duty exemption: HC

Our Legal Correspondent

Chennai, July 30 The Madras High Court has held that Coimbatore Pioneer Fertilizers Ltd is entitled to total exemption from payment of customs duty on imported steam turbine, and directed the Union Ministry of Chemicals & Fertilizers to treat the machine as falling under Entry 261, Chapter 98.01(i) of the First Schedule to Customs Tariff Act, 1975.

Mr Justice K. Chandru, while allowing a writ petition of the company challenging the order dated July 7, 1999 of the Ministry (1st respondent) refusing to grant an essentiality certificate to the petitioner so as to be eligible for duty exemption, set aside the said order. If the petitioner had already paid any duty for importing the said steam turbine, the same should be refunded to them.

The petitioner, producing superphosphate, planned to double capacity to 80,000 tonnes annually, with an investment of Rs 215 lakh. It applied to the Ministry for claiming total exemption from payment of customs duty for the steam turbine to be imported from Germany.

But the application was rejected on the ground that according to the Government’s policy, captive power plants to be installed in fertiliser plants would be liable for customs duty.

The petitioner submitted that either the Ministry treatsteam turbine required by petitioner as part of the expansion of its fertiliser plant, or it should be treated as a captive power plant.

In the present case, the petitioner’s expansion project included steam turbine which was an integral part of the fertiliser project. As such, the petitioner was entitled for total exemption from duty.

Quoting a judgment of the Supreme Court in Zuari Industries Ltd vs Commissioner of Central Excise & Customs [2007 (5) SCALE 153], the Judge said that even before deciding the issue, the sponsoring Ministry consulted the Dept of Revenue and did not take into account relevant factors and merely went by the advice of the Revenue deartment.

In the light of the above, the impugned order of the 1st respondent would have to be necessarily set aside. Accordingly, the writ petition was allowed, and the impugned order would stand set aside.

The respondent was directed to grant the petitioner total exemption from payment of customs duty in respect of the steam turbine imported by treating same as falling under Entry 261 of Chapter 98.01.

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