2024 (11) TMI 982 - AT - Central Excise

Classification of goods - Biovita - to be classified under heading 3101 0099 or under Central Excise heading as 3105 of Central Excise Tariff? - HELD THAT - A perusal of show cause notice shows that it relies on the CBEC Circular 1022/10/2016-CX dated 06.04.2016. The said circular prescribed that micronutrient could not be classified under Chapter 31 as fertilizer . It also relies on the fact that the appellants had in the month of July 2015 themselves classified the goods under Central Excise Tariff Heading 3808 and in the months of June, August, September-2015 classified the product under Central Excise Tariff Heading 3105 as per directions of M/S. P.I. INDUSTRIES LIMITED (FORMERLY M/S. ISAGRO (ASIA) AGROCHEMICALS PVT. LTD.) ; M/S. AGRO PACK; SHRI PARTH H. PATEL VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS, SURAT-II, SURAT 2024 (9) TMI 1655 - CESTAT AHMEDABAD (LB) the principal manufacturer. It is noticed that subsequent to the impugned order, the issue regarding classification of goods between Chapter 31 and Chapter 38 was referred to the Larger Bench in the case of PI Industries (the Principal Manufacturer itself). It is seen that while the products in the instant case are not identical but similar in nature, therefore, the principles laid down by Larger Bench of Tribunal in the case of PI Industries would equally apply to the product in the instant case. In view of above, the impugned order is set aside and matter remanded to the original adjudicating authority for fresh decision in the light of observations made by Larger Bench in the case of PI Industries. Appeal is allowed by way of remand.

Issues Involved:

1. Classification of Biovita under the Central Excise Tariff.
2. Applicability of Fertilizer Control Order definitions to Biovita.
3. Relevance of previous tribunal decisions and customs classifications.
4. Distinction between fertilizers and plant growth regulators.

Detailed Analysis:

1. Classification of Biovita under the Central Excise Tariff:

The primary issue in the appeal was the classification of Biovita, a product manufactured by spraying Biovita liquid on Bentonite Granules, under the Central Excise Tariff. The appellant classified Biovita under heading 3101 0099, claiming a nil rate of excise duty, but mistakenly declared different headings in certain months. The authorities issued a show cause notice to classify the goods under heading 3808 as a Plant Growth Regulator, demanding differential excise duty and suggesting penalties. The appellant argued that the correct classification should be under heading 3101, consistent with the classification of Acadian Seaplants Seaweed Extract Powder (ASSEP) under the Customs Tariff, which has been accepted after extensive litigation.

2. Applicability of Fertilizer Control Order definitions to Biovita:

The appellant relied on the Fertilizer Control Order (FCO) definitions, arguing that Biovita should be classified as a 'Bio-Fertiliser' or 'Biostimulant,' as these terms are not defined under the Central Excise Tariff. The FCO defines 'bio-fertiliser' as a product containing agriculturally useful microorganisms, and 'biostimulant' as substances that stimulate physiological processes in plants, excluding pesticides or plant growth regulators. The appellant contended that Biovita, being a biostimulant, fits within the definition of a fertilizer under heading 3101.

3. Relevance of previous tribunal decisions and customs classifications:

The appellant cited the decision of a Larger Bench of the Tribunal in the case of PI Industries, which held that bio-stimulants are classifiable as fertilizers under heading 3101 of the Customs Tariff, not as plant growth regulators under heading 3808. The appellant argued that this decision should apply to Biovita, as the customs authorities had accepted the classification of similar products under heading 3101 after prolonged litigation. The Tribunal noted that the issue of classification between Chapter 31 and Chapter 38 had been referred to the Larger Bench, which provided clarity not available to the lower authorities.

4. Distinction between fertilizers and plant growth regulators:

The Tribunal examined the distinction between fertilizers and plant growth regulators, noting that fertilizers provide essential nutrients for plant growth, while plant growth regulators influence specific physiological processes. The Tribunal referred to the Larger Bench's decision, which emphasized that bio-stimulants, like fertilizers, provide nutrients and do not alter physiological processes. The Tribunal concluded that Biovita, being similar to products previously classified as fertilizers, should be classified under heading 3101.

Conclusion:

The Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh decision, considering the observations made by the Larger Bench in the PI Industries case. The appeal was allowed by way of remand, emphasizing the principles laid down regarding the classification of bio-stimulants as fertilizers.

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