2018 (4) TMI 1346 - AT - Customs

Classification of imported goods - calcium nitrate - mono potassium phosphate - whether classifiable under heading 3105 or under heading 2834/2835 of the First Schedule to the Customs Tariff Act, 1975? - Held that - when the grouping of products and their description very obviously connotes end-use such disassociation cannot be said to be intended - Chapter 31 of the First Schedule to the Customs Tariff Act, 1975 deals entirely with fertilisers. Fertilisers, by its very nomenclature, indicates nothing but their usage; these are intended for use in agriculture for ensuring better yield of crop. The explanatory notes to the Harmonized System of Nomenclature for chapter 31 excludes separate chemically defined compound but does not exclude those answering to descriptions in note 2A, 3A, 4A or 5. A common feature of these negative exclusions is that they should not be put up in forms and packages described in heading 3105. The exclusion for separately defined chemical compound from chapter 31 is but natural as fertilisers are also indisputably inorganically chemicals or inorganic compounds. Hence such separate chemically defined compound that are not intended for use as fertilizer would, by default, be classifiable within the appropriate entry in Chapter 28 of the first schedule to the Customs Tariff Act, 1975. The claim of Revenue for classification under chapter 28 fails to sustain - appeal dismissed - decided against Revenue.

Summary

Issues: Classification of imported goods as 'calcium nitrate' and 'mono potassium phosphate' under heading 3105 or under heading 2834/2835 of the First Schedule to the Customs Tariff Act, 1975.

Analysis:
1. The dispute revolves around the classification of imported goods as fertilizers under chapter 31 or as inorganic chemicals under chapter 28 of the Customs Tariff Act. The importers claim the goods to be fertilizers, while the Revenue argues for classification under chapter 28 due to specific exclusions in the tariff and circulars.

2. The Revenue contends that the goods should be classified under chapter 28 if excluded from chapter 31, citing circular no. 44/2001 and specific entries like 'calcium nitrate' and 'potassium nitrate'. Reference is made to judicial decisions emphasizing classification under specific entries rather than residual ones, and the importance of tariff entry language over end-use for classification purposes.

3. The appellant relies on a tribunal decision and a circular clarifying the classification of 'calcium nitrate' based on whether it is a single product or part of a mixture. The tribunal decision highlights the importance of determining whether the goods qualify as fertilizers under chapter 31, considering specific entries and exclusions in the tariff.

4. The tribunal's analysis in a previous case emphasizes the distinction between fertilizers and chemically defined compounds, noting that specific mentions in the tariff guide classification. The tribunal rejects the Revenue's argument for classification under chapter 28, asserting that the imported goods fall under chapter 31 based on their composition and intended use as fertilizers.

5. The tribunal underscores that while end-use should not solely determine classification, the nature of the goods and their intended agricultural use align with the definition of fertilizers under chapter 31. The exclusion of separately defined chemical compounds from chapter 31 is logical, as fertilizers are inorganic chemicals, leading to the classification of the goods as fertilizers.

6. The tribunal highlights that the competent authorities' recognition of the goods as fertilizers overrides the argument for classification as separately defined chemical compounds. The goods being licensed as fertilizers further solidifies their classification under chapter 31, dismissing the Revenue's claim for classification under chapter 28.

7. The tribunal ultimately dismisses the Revenue's appeals, affirming the classification of the imported goods as fertilizers under chapter 31 of the Customs Tariff Act, 1975.