2017 (9) TMI 140 - AT - Central Excise

Classification of goods - Bio fertilizer (Shakti) - whether classified under CTH 380890 or under CTH 310100? - Held that - As it is indicated in literature that it is a mixture of different micronutrients and auxin and cytokinins, it cannot be termed as a chemically defined element or compound as is required in Chapter Note 01 of Chapter 38 of Central Excise Tariff - the product is correctly classified under CTH 310100 - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Classification of Bio-fertilizer (Shakti) under Central Excise Tariff Act, 1985 - Whether it falls under Chapter 38 as Plant Growth Regulators (PGR) attracting Central Excise Duty or is exempt as a vegetable fertilizer under Chapter 31.

Analysis:
The appellant, engaged in manufacturing Pesticides, Insecticides, Bio-fertilizer, and other fertilizers, faced an allegation that their Bio-fertilizer (Shakti) is a PGR under heading No. 380890, attracting Central Excise Duty, instead of being exempt under CETH 310100 as a vegetable fertilizer. A Chemical Analysis Report revealed the composition of the product containing auxins and cytokinins, known as plant growth regulators. The appellant challenged the demand, interest, and penalties imposed, leading to an appeal. The Commissioner (Appeals) allowed the appeal, prompting the Revenue to appeal before the Tribunal.

The appellant argued that products in Chapter 3808, including PGRs, are not all directly applied to plants, citing examples of insecticides mixed in soil. They highlighted the presence of auxins and cytokinins in the product, emphasizing that plant growth regulators in retail packaging are covered under Chapter 38, supported by Circular No.392/25/98-CX.

The respondent contended that the Chemical Examiner's report lacked conclusive data on the percentage composition of auxin and cytokinins. Referring to legal precedents, they argued that for classification under Heading 3808, a plant growth regulator should be a chemically defined element or compound, which the impugned product, being a mixture, did not meet.

The Tribunal analyzed the Chemical Examiner's report and accompanying literature, noting the presence of auxins and cytokinins in the product. However, the report lacked quantitative composition details. The literature described the product as a mixture of nutrients, auxins, cytokinins, enzymes, amino acids, and proteins, enhancing plant growth activities and acting as a bio-stimulant for soil application.

The Tribunal upheld the Commissioner (Appeals)'s analysis, concluding that the impugned product did not qualify as a chemically defined element or compound under Chapter Note 01 of Chapter 38. As the product was a mixture, not meeting the criteria for a PGR, the appeal of the Revenue was dismissed, emphasizing the lack of merit in their case.

In conclusion, the Tribunal's detailed analysis of the product's composition, legal arguments, and relevant precedents led to the dismissal of the Revenue's appeal, affirming the classification of the Bio-fertilizer (Shakti) as not falling under Chapter 38 as a PGR but being exempt as a vegetable fertilizer under Chapter 31 of the Central Excise Tariff Act, 1985.