2016 (3) TMI 1043 - AT - Central Excise

Classification - 1. Allwin Gold, 2. Allwin Top, 3. Allwin Top plus, 4. Allwin Wonder, 5. Allwin Wonder Plus, 6. Allwin Legume, 7. Allwin Elixer, 8. Ramdoot, 9. Bolt, 10. Dosth. Out of these 10 products, appellant claimed classification 3105 9090 whereas the Revenue classified them under 3824 9090 as plant growth regulators - Held that - We find that Allwin Wonder plus and Allwin wonder contains potassium and nitro benzene which has elements of both Nitrogen and potassium. In the case of Allwin Top plus and Allwin Top contains Mono ammonium phosphate, and potassium humate which contains both phosphorous and potassium. In the case of Allwin Legume and Allwin Elixier both products contain nitrogen, phosphorous etc., which clearly confirms as other fertilizers as stipulated under Chapter note 6 of chapter 31 and confirms Board s Circular referred above. There is no dispute on the composition as confirmed from the test reports and confirms that both nitrogen and phosphorous or nitrogen and potassium or either one of the above are present in these mixtures and the usage as folio spray is not under dispute. Therefore, the adjudicating authority relying Fertilizer Control Order (FCO) for deciding the classification under 3105 is not justified and not substantiated. Accordingly, we hold that these products (sl.no. 3 to 9) qualified to be considered as other chemical fertilizers and contain either nitrogen, phosphorous or potassium, which is the essential constituents to be classified under other fertilizers. Accordingly, we hold that these products are rightly classifiable under 3105 9090 and not under 3824 9090. As regards Allwin Gold, we find that the adjudicating authority proposed to classify it under 3808 9340. As already discussed above, the composition of the product contains nitro benzene (20%) and urea (3%) along with other chemicals, which is not under dispute. It is not the case here that the appellants are clearing nitro benzene as such but it is used as one of the raw materials for manufacture of the product which is Allwin Gold. Both urea and nitrobenzene contains nitrogen which is essential ingredient for fertilizers. Therefore, the Revenue classifying them as plant growth regulators is not justified. We also find from the test reports and noticed that it does not contain any hormone ie., auxins, gibberellins or cytokinins. These are chemical hormones whether naturally or synthetically considered as growth regulators. In the present case, it is only a mixture of chemicals which are sprayed as folio spray for enhancing the growth of the folio in the stage of blooming. Accordingly, we do not see any justification by the Revenue classifying the products under 3808 9340 as PGR. Therefore, we hold that Allwin Gold is rightly classifiable under 3105 9090. As regards the last item Dosth , we find that this product was not declared by the appellant nor it was cleared separately but kept in the packets as a combi-pack. On perusal of the sample packet of Allwin wonder plus, we find that Dosth is a wetting agent and kept inside the pack of Allwin wonder plus as 20 ml sachet. It is an option to the user to use this wetting agent comes with combi-pack. There is no dispute that that the appellants are not clearing the wetting agent separately. But it is packed inside Allwin Wonder plus and sell it as a combi-pack. Accordingly, we hold that Dosth is rightly classifiable under 3105 9090 along with the main item.

Issues Involved:
1. Classification of products manufactured by the appellant.
2. Demand and penalties imposed by the Commissioner of Central Excise.
3. Relevance of the Fertilizers Control Order (FCO) for classification.
4. Classification of specific products such as Allwin Gold and Dosth.
5. Appeals by individuals penalized under Rule 26 of Central Excise Rules, 2002.

Issue-wise Detailed Analysis:

1. Classification of Products Manufactured by the Appellant:
The primary issue revolved around the classification of various products manufactured by the appellant. The appellant classified their products under CETSH 3101 0099, treating them as Animal/Vegetable fertilizers or bio-fertilizers. The department, however, proposed to classify them under CETSH 3824 9090. The adjudicating authority classified several products under Chapter 38, leading to substantial demands and penalties. The Tribunal analyzed whether the products should be classified under Chapter 31 (fertilizers) or Chapter 38 (plant growth regulators). The Tribunal emphasized that for classification under 3105, the products must contain essential constituents like nitrogen, phosphorous, or potassium and be used as fertilizers. The Tribunal found that the products met these criteria and should be classified under 3105 9090.

2. Demand and Penalties Imposed by the Commissioner of Central Excise:
The Commissioner confirmed demands and imposed penalties on the appellant for misclassification of products. The Tribunal upheld the demand and penalties for certain products like Rishab, Allwin XL, Rock, Agrowet, and Rhino, as the appellant did not contest these. However, for other products, the Tribunal set aside the demands and penalties, holding that these products were rightly classifiable under 3105 9090.

3. Relevance of the Fertilizers Control Order (FCO) for Classification:
The adjudicating authority rejected the classification under Chapter 31 based on the products not being covered under the FCO. The Tribunal, however, referred to the Board's Circular dated 19.05.1998, which clarified that FCO is irrelevant for classification under the Central Excise Tariff. The Tribunal concluded that the products containing nitrogen, phosphorous, or potassium should be classified under Chapter 31, irrespective of their inclusion in the FCO.

4. Classification of Specific Products such as Allwin Gold and Dosth:
For Allwin Gold, the department classified it under 3808 as a plant growth regulator. The Tribunal found that Allwin Gold contained nitrobenzene and urea, both of which contain nitrogen, making it classifiable as a fertilizer under 3105 9090. Regarding Dosth, the Tribunal noted that it was a wetting agent supplied as part of a combi-pack with Allwin Wonder Plus. Following the principle of classifying goods in a set by their essential character, the Tribunal held that Dosth should be classified under 3105 9090 along with the main product.

5. Appeals by Individuals Penalized under Rule 26 of Central Excise Rules, 2002:
The Tribunal set aside the penalties imposed on individuals (MD, GM, and Factory Manager) since the demand against the company was largely set aside. The penalties on individuals could not be sustained without the primary demand being upheld.

Conclusion:
The Tribunal's decision resulted in partial relief for the appellant. The demands and penalties for certain products were upheld, while for others, they were set aside. The Tribunal emphasized the correct application of classification rules and Board's Circulars, providing a detailed analysis of the classification criteria under Chapter 31 and 38. The appeals by individuals were allowed, providing consequential relief.

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