Excise Duty for a Day?
Di-calcium Phosphate was exempted from excise duty with effect from 03.02.2014. Now the Government has exempted this product for the period commencing on the 1st day of February, 2008 and ending with the 1st day of February, 2014, by issuing a Section 11C Notification. Please note there is no exemption on 2 nd day of February 2014.
Di-calcium Phosphate (DCP) is a peculiar product having multiple uses. It can be used as Fertiliser (Fertiliser Grade), Animal Feed (Animal Feed Grade) or in your Toothpaste (Dentifrice Grade).
When the manufacturers of DCP (Animal Feed Grade) claimed classification under Chapter 23 (Nil rate), department rejected the classification and demanded duty by classifying it under Chapter 28. Board had also issued a Section 37B order on 03.03.1997 classifying it under Chapter 28, but the same was quashed by the Gujarat High Court. As a result, Board had withdrawn the 37B order vide Circular dated 15.11.2002.
The agony of DCP (Animal Feed Grade) manufacturers started once again with the changes in Central Excise Tariff. With the introduction of 8-digit tariff, DCP is specifically classified under CETH 2835 25 00. The department started second round of litigation on the ground that the earlier judgements apply only to DCP obtained from Animal Bones and DCP (Animal Feed Grade) manufactured from other raw materials, i.e., Rock Phosphate is classifiable under CETH 2835 2500. A small spark ignited in one corner of the Country spread like wildfire with MO Circulars flying around and Show Cause Notices issued demanding crores of duty. Confirmed demands running into crores are hanging on the heads of several manufacturers.
The good Board issued a Notification No 03/2014 CE dated 03.02.2014 exempting DCP of animal feed grade conforming to IS specification No. 5470:2002. However, the trouble continued for the earlier period.
Maybe to improve the ease of doing business, the Government has now issued Section 11C Notification that duty shall not be required to be paid on DCP (Animal Feed Grade) of Rock Phosphate origin, covering the period from 1st day of February, 2008 and ending with the 1st day of February, 2014.
As mentioned in the beginning, the exemption under Notification No 03/2014 CE is effective from 03.02.2014 and the 11C exemption is issued up to 1 st February 2014. So, for one day, i.e., on 2 nd February, there is no exemption and all the manufacturers are required to pay duty.
Will the Government correct this mistake by issuing another Section 11C notification or will litigation continue for the duty for that one day? If the Board subscribes to the governance theory of the Prime Minister, it will admit its mistake and amend the date in the notification. On the other hand, if the Board believes more in government than governance, they will not admit that mistake and there will be litigation - adjudication, appeals - the whole process of justice dispensation.
Notification No. ., Dated: February 12, 2016