2014 (10) TMI 526 - AT - Central Excise

Waiver of pre-deposit Stay application - Classification of micronutrients - Whether the mixture of micronutrients can be considered as other fertilizers or not Held that - Following the decision in CCE, Bangalore Versus M/s. Karnataka Agro Chemicals 2008 (5) TMI 14 - SUPREME COURT assessee contended that the product(s) is a mixture of various inorganic substances whose essential constituent is nitrogen which makes it a fertilizer - the scientific study indicates that PGRs are organic compounds, other than nutrients - As compared to nutrients which play a major role in the plant growth as a whole, PGRs play a restrictive role - essentially the product is PGR - PGR do not contain N, P or K - according to the Chemical Examiner s report submitted by the assessee and it forms part of the records and not disputed by the Revenue, micronutrient fertilizers manufactured by the appellants contain N, P or K - the assessee have made out a prima facie case on merits the pre-deposits waived during the pendency of appeal Stay granted.

Summary

Issues: Classification of micronutrients under Central Excise Tariff Act 1985, applicability of exemption Notification No. 4/2006-CE, waiver of pre-deposit requirement.

Classification under Central Excise Tariff Act 1985:
The judgment revolves around the classification of micronutrients under the Central Excise Tariff Act 1985. The departmental officers discovered that the assessee had manufactured and cleared micronutrients without intimating the department or discharging duty liability. The Revenue argued that micronutrients are not covered under the tariff heading chosen by the appellant. The dispute centered on whether the mixture of micronutrients could be considered as other fertilizers. The Chemical Examiner's report indicated that the micronutrient fertilizers contained nitrogen, phosphorus, and potassium, unlike plant growth regulators. The appellants argued that the micronutrients could be classified as other fertilizers based on the composition and purpose of the product. The Tribunal found that the appellants had made a prima facie case on merits, and thus waived the pre-deposit requirement and granted a stay against recovery during the appeal.

Applicability of Exemption Notification No. 4/2006-CE:
The assessee had initially cleared micronutrients without intimating the department and without discharging the duty liability. Subsequently, these clearances were reflected as made under an exemption Notification. The issue arose whether the micronutrients qualified for exemption under Notification No. 4/2006-CE dated 01.03.2006 as amended. The Tribunal focused on the composition and labeling of the micronutrients to determine their classification and eligibility for exemption. The presence of specific nutrients in the micronutrients was a crucial factor in the classification dispute. The Tribunal referenced previous cases and the Chemical Examiner's report to establish the nature of the micronutrient fertilizers and their classification under the relevant tariff headings. The Tribunal's decision to waive the pre-deposit requirement was based on the prima facie case made by the appellants regarding the classification of the micronutrients.

Waiver of Pre-deposit Requirement:
The Tribunal considered the waiver of the pre-deposit requirement in light of the arguments presented by both sides and the findings regarding the classification of the micronutrients. The appellants relied on previous Tribunal orders and the composition of the micronutrients to support their claim that the product could be classified as other fertilizers. The Chemical Examiner's report played a crucial role in establishing the composition of the micronutrients and differentiating them from plant growth regulators. The Tribunal's decision to waive the pre-deposit requirement was based on the prima facie case made by the appellants regarding the classification of the micronutrients and the presence of essential nutrients in the product. The waiver was granted to allow the appeal to proceed without the need for immediate payment of the demanded duty amount.