2014 (6) TMI 717 - AT - Central Excise

Waiver of pre-deposit of duty - Classification Zymegold plus - Tariff Heading 3101 00 99 or under Tariff Heading 3808 - Held that - As per the Chemical Examiner s report dated 3-9-2010 and as the applicant submitted the write up in respect of the product in question and the applicant admitted presence of technical grade urea in the product in question. Therefore, the product in question cannot be classified as organic fertilizer under Tariff Heading 31 of the Central Excise Tariff. In respect of the limitation, we find that the applicants were regularly clearing the product in question at nil rate of duty by claiming classification under Tariff Heading 3101 00 99 of the Central Excise Tariff and filing statutory returns - The demand for the normal period of limitation as quantified in Annexure to the Show Cause Notice comes to Rs. 36 lakhs. - stay granted partly.

Summary

Issues:
Waiver of pre-deposit of duty, classification of product under Central Excise Tariff, time bar for demand, presence of technical grade urea in product, classification as organic fertilizer, limitation on demand amount.

Analysis:
The applicant sought waiver of pre-deposit of duty amounting to Rs. 2,42,31,844/-, interest, and penalty for the period November 2006 to September 2010 related to the product Zymegold plus. The Revenue contended that the product, claimed as organic fertilizer under Tariff Heading 3101 00 99, should be classified under Tariff Heading 3808 as a plant growth regulator due to the presence of specific ingredients. The Revenue invoked the extended period of limitation based on suppression with intent to evade duty payment.

The applicant argued that their product primarily consisted of seaweed extract powder and was marketed as organic fertilizer. Samples were tested by various authorities, with conflicting opinions on the classification. The Director of the Central Fertilizer Quality Control and Training Institute stated that only specific products were recognized as organic fertilizers, excluding the applicant's product. However, the Chemical Examiner of Central Revenue Control Laboratory identified plant growth regulators in the samples, leading to the Revenue's classification.

The Tribunal observed that the presence of technical grade urea in the product precluded its classification as organic fertilizer under Tariff Heading 31 of the Central Excise Tariff. Despite this, the Tribunal acknowledged the applicant's consistent clearance of the product under a specific Tariff Heading without objection, supporting the argument against suppression with intent to evade duty payment. The demand for the normal limitation period was assessed at Rs. 36 lakhs, which the Tribunal deemed acceptable.

Considering the circumstances, the Tribunal directed the applicant to deposit Rs. 36 lakhs within six weeks, with the remaining dues' pre-deposit waived and recovery stayed during the appeal's pendency. The compliance deadline was set for 21-2-2013.