2017 (7) TMI 289 - AT - Central Excise

Classification of Micronutrients - Chelamin, Agromin, Chelafer and Chelacop - Held that - the impugned products definitely do contain more than one of the essential nutrients listed in the circular, they have also contain recognisable percentage of nitrogen. This being so, the disputed items are certainly micronutrients - In view of presence of nitrogen, and also considering that they are mixtures and not separate chemically defined compounds, the said goods would therefore come under the ambit of micronutrient fertilisers and will then required to be classified as in other fertilisers in CETH 31.05 - appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of goods under Central Excise Tariff Act, 1985 - Whether Chelamin, Agromin, Chelafer & Chelacop should be classified as Plant Growth Regulators under CETH 3808 or as Other Fertilizers under CETH 3105.

Analysis:
The case involved the classification of goods manufactured by the respondents, namely pesticides and micronutrient fertilizers, under the Central Excise Tariff Act, 1985. The department issued show cause notices proposing to classify the goods as Plant Growth Regulators under CETH 3808 20, while the Commissioner upheld the classification of the goods as Other Fertilizers under CETH 3105 90 90 in the Order-in-Original No. 25/2005. Subsequently, another show cause notice was issued for goods cleared from April 2005 to December 2005, which was also adjudicated in favor of the respondents classifying the goods as Other Fertilizers under CETH 3105 90 90 in Order-in-Original No. 03/2006.

The appellant department appealed against these decisions, arguing that the goods should be classified as Plant Growth Regulators under CETH 3808. The department contended that the impugned goods, being micronutrients, failed to meet the requirements of note 6 to Chapter 31 and should be classified under heading 38.08 based on principles of classification established by the Apex Court and HSN notes. The department also highlighted the capability of the goods in enhancing crop yield, supporting their classification as Plant Growth Regulators.

On the other hand, the respondents argued that the products were mixtures and not chemically defined compounds, making them classifiable under CTH 3808.20 as Plant Growth Regulators. They emphasized that the presence of nitrogen in the goods led to their classification as Other Fertilizers under CTH 3105, as per Chapter Note 1 and the absence of a minimum nitrogen percentage requirement in Chapter 31.

The Tribunal examined the historical perspective on the classification of micronutrients, noting changes in CBEC circulars over the years. The circulars clarified the classification criteria based on the presence of essential nutrients and the distinction between micronutrients and plant growth regulators. The Tribunal concluded that the impugned goods, containing essential nutrients and nitrogen, were micronutrients and should be classified as Other Fertilizers under CETH 3105.90. Therefore, the Revenue appeals were dismissed, upholding the classification of the goods as Other Fertilizers.

Overall, the judgment provided a detailed analysis of the classification criteria, historical circulars, and relevant legal principles to determine the appropriate classification of the goods under the Central Excise Tariff Act, 1985.