2018 (12) TMI 496 - AT - Central Excise

Classification of goods - Import of Siapton 10L in 200Ltr drums and the same is repacked and sold - appellant sought classification of the product under Chapter heading 31 where repacking, labeling does not amount to manufacture, while the Revenue has sought to classify the product under Chapter heading 38 where repacking, labeling etc. amounts to manufacture - whether impugned goods merit classification under Chapter heading 31 or under Chapter heading 38 - Difference of opinion. Held that - As there is difference of opinion, the issue needs to be referred to a Larger Bench for determination of following question - Is it necessary for a plant growth promoter to be able to simultaneously inhibit growth or otherwise modify (apart from promotion) plant processes, to qualify as plant growth regulator under heading 3808 of Central Excise Tariff Act, 1985? The registry may place the file before the Hon'ble President to constitute a larger bench to resolve this issue.

Summary

Issues Involved:
1. Classification of the product Siapton 10L under the Central Excise Tariff Act.
2. Determination of whether repacking and labeling activities amount to manufacture.
3. Imposition of penalty under Rule 25 of Central Excise Rules, 2002.
4. Validity of reliance on technical literature, including Wikipedia, for classification.
5. Applicability of the Fertilizer Control Order and the Insecticides Act in classification.
6. Necessity for a plant growth promoter to inhibit or modify plant processes to qualify as a Plant Growth Regulator (PGR).

Issue-wise Detailed Analysis:

1. Classification of the Product Siapton 10L:
The appellant argued that Siapton 10L, consisting mainly of amino acids, should be classified under Chapter heading 3101 as a fertilizer, where repacking and labeling do not amount to manufacture. The Revenue contended that the product should be classified under Chapter heading 3808 as a Plant Growth Regulator (PGR), where such activities do amount to manufacture. The Tribunal referred to previous decisions and literature, noting the distinction between plant growth promoters and regulators. The Tribunal emphasized that PGRs can promote, inhibit, or modify plant processes, whereas the appellant's product primarily promotes growth.

2. Determination of Whether Repacking and Labeling Amount to Manufacture:
The appellant claimed that repacking from bulk to small packs and labeling did not constitute manufacturing under Chapter 31. However, if classified under Chapter 38, these activities would amount to manufacture. The Tribunal noted that Chapter 31 covers fertilizers, where repacking and labeling are not considered manufacturing activities, unlike Chapter 38, which includes PGRs.

3. Imposition of Penalty Under Rule 25 of Central Excise Rules, 2002:
The appellant argued against the imposition of penalties, asserting no intention to evade duty or suppression of facts. They highlighted that the Customs authorities had consistently classified the product as a fertilizer under heading 3101. The Tribunal did not provide a final decision on penalties, pending the larger bench's determination on the classification issue.

4. Validity of Reliance on Technical Literature, Including Wikipedia:
The appellant contested the reliance on Wikipedia by the Commissioner for classification, arguing it lacks legal or authentic definitions. They presented a certificate from an agricultural expert and international classifications to support their stance. The Tribunal acknowledged the appellant's concerns but did not conclusively rule on the validity of using Wikipedia, focusing instead on established literature and definitions in the field.

5. Applicability of the Fertilizer Control Order and the Insecticides Act:
The appellant noted that their product was not classified under the Insecticides Act as a Plant Growth Regulator, and the Fertilizer Control Order did not cover it. The Tribunal recognized these points but emphasized the need to adhere to the Central Excise Tariff Act's classification criteria, which may differ from other regulatory frameworks.

6. Necessity for a Plant Growth Promoter to Inhibit or Modify Plant Processes to Qualify as a PGR:
The Tribunal highlighted a significant issue: whether a plant growth promoter must also inhibit or modify plant processes to be classified as a PGR under heading 3808. They referenced the Circular No. 1022/10/2016-CX and various literature, concluding that a product need not perform all three functions (promote, inhibit, and modify) simultaneously. The Tribunal decided to refer this critical question to a larger bench for resolution.

Conclusion:
The Tribunal acknowledged the complexity of the classification issue and the need for a larger bench to determine whether a plant growth promoter must inhibit or modify plant processes to qualify as a PGR. The final decision on penalties and other issues will depend on this determination. The registry was directed to place the file before the Hon'ble President to constitute a larger bench to resolve the issue.