2016 (11) TMI 2 - AT - Customs

Re-classification of imported goods - mono potassium phosphate with purity of 99.6% - fertilizers classified under heading 3105.60 of the First Schedule to the Customs Tariff Act, 1975 and heading 3105.00 of the Schedule to the Central Excise Tariff Act, 1985 or separate chemically defined compound classifiable under chapter 28? - whether the imported goods are fertilizers within the meaning of chapter 31 of the First Schedule of the Customs Tariff Act, 1975? - the decision of Commissioner of Customs (Import), Mumbai v. Pioneer Agritechoscan 2007 (2) TMI 367 - CESTAT, MUMBAI referred - Held that - in the case Pioneer Agritechoscan which refers to calcium nitrate which was declared for import under 31.05 which is a residuary heading whereas the present import claimed classification under 3105.60 which is a heading as specific as in chapter 28. In the referred decision, emphasis has been placed on the chapter note 1(b) which has certain exclusions that would enable classification within the ambit of chapter 28 - In the context of the present import, that particular line of reasoning may not provide the answer. The goods listed in notes 2(A), 3(A), 4(A) or 5 to which note 1(b) refer are intended to restrict the applicability under one or other of headings 31.02, 31.03, 31.04 as applicable. Note 6 of chapter in relation to the residuary category restricts classification under other fertiliser in 31.05 to goods to be used as fertilisers and containing one of the fertilizing elements. In view of the above arrangement of exclusions and inclusions in chapter 31, it would appear that all of the headings preceding 31.05 are to be taken as fertiliser to the extent that these are also used as fertilizer and not excluded by note 1(b). There is no averment in the note or impugned order that that the imported goods are not fertilizer. For the above reasons, we find that the classification of the imported goods should fall under chapter 31 and not chapter 28. The inclusions of the imported items in the Fertiliser (Control) Order 1985, as amended in 1995, cannot but reinforce the opinion that these are indeed fertilisers as decided by the competent department of the Government of India - imported goods are fertilizers - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported goods as fertilizers under chapter 31 or separate chemically defined compounds under chapter 28; Invocation of extended period of limitation for duty determination.

Analysis:
1. Classification of Imported Goods:
The issue revolved around the classification of imported goods as fertilizers under chapter 31 or separate chemically defined compounds under chapter 28. The importers claimed the goods to be fertilizers containing phosphorous and potassium, while the department classified them as separate chemically defined compounds under chapter 28. The appellant argued that the goods met the definition of fertilizers under note 6 of chapter 31 and should be classified accordingly. They presented various evidence, including test reports, sales invoices, and registration certificates, to support their claim. The Tribunal analyzed the contentions, noting that the goods fell within the definition of fertilizers under chapter 31, considering the exclusions and inclusions in the chapter. The Tribunal emphasized that the imported goods should be classified under chapter 31 as fertilizers, as supported by their inclusion in the Fertiliser (Control) Order 1985.

2. Invocation of Extended Period of Limitation:
Regarding the invocation of the extended period of limitation for duty determination, the Tribunal referred to Circular no. 44/2001-Customs and highlighted that certain chemical compounds, including monopotassium phosphate, would be classified under chapter 28 and not chapter 31 as fertilizers. However, the Tribunal upheld the view that the extended period of limitation was not applicable in this case. It was noted that the controversy surrounding the classification of micronutrient fertilizers was unsettled, and there was a lack of clarity between the Ministry of Finance and Ministry of Agriculture. The Tribunal emphasized that mere non-declaration was not sufficient to invoke the extended period and that positive acts of suppression were required. Consequently, the Tribunal ruled against invoking the extended period of limitation or imposing penalties, aligning with previous legal precedents.

In conclusion, the Tribunal allowed the appeals, classifying the imported goods as fertilizers under chapter 31 and rejecting the invocation of the extended period of limitation for duty determination. The judgment emphasized the importance of proper classification based on legal definitions and supporting evidence while considering the applicability of extended periods for duty assessment.