2018 (1) TMI 148 - AT - Central Excise

Classification of goods - Micronutrient - whether classified under Chapter No.38 of the Central Excise Tariff or otherwise? - Held that - the products which are manufactured by the assessee/appellants and described as Micronutrients will be classified under Chapter Heading No.3105 and all the appeals filed by the appellant on this point succeed - reliance placed in the case of CCE & ST, Hyderabad-IV Versus M/s Aries Agrovet Industries Ltd 2017 (7) TMI 289 - CESTAT HYDERABAD , where it was held that 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 - the Adjudicating Authority was correct in classifying the product under Chapter 31051000 and holding it has dutiable. Appeal disposed off.

Issues Involved:
1. Classification of Micronutrients.
2. Classification of Bio Fertilizers of Plant and Animal Origin.
3. Eligibility for SSI benefit for Pesticides/Fungicides of Chemical Origin.
4. Classification of Zinc Sulphate (Agriculture Grade).

Issue-wise Detailed Analysis:

1. Classification of Micronutrients:
The primary issue revolves around whether the products described as Micronutrients should be classified under Chapter Heading No.31055900 (as claimed by the assessee) or under Chapter Heading No.38089910 (as claimed by the Revenue). The Tribunal referenced prior decisions in similar cases, such as Aries Agrovet Industries Ltd. and Hindustan Agro Insecticides, where it was established that Micronutrients should be classified under Chapter Heading No.3105. The Tribunal reiterated that Micronutrients, which promote normal plant growth and contain essential nutrients like nitrogen, should be classified as "Other Fertilizers" under CETH 31.05. The Tribunal upheld this classification, dismissing the Revenue's argument that these products should be considered plant growth regulators under Chapter 38.

2. Classification of Bio Fertilizers of Plant and Animal Origin:
The assessee did not contest the classification of Bio Fertilizers of Plant and Animal Origin, which the Adjudicating Authority classified under Chapter 31051000. The Tribunal agreed with the Adjudicating Authority's decision, holding that the product was correctly classified and dutiable under Chapter 31051000.

3. Eligibility for SSI Benefit for Pesticides/Fungicides of Chemical Origin:
The Tribunal examined whether the assessee was eligible for the Small Scale Industry (SSI) benefit for Pesticides/Fungicides of Chemical Origin. The Adjudicating Authority had denied this benefit, concluding that the total turnover of the assessee exceeded the threshold limit stipulated in the SSI notification. The Tribunal upheld this decision, agreeing that the assessee was not eligible for the SSI exemption due to exceeding the turnover limit.

4. Classification of Zinc Sulphate (Agriculture Grade):
The Revenue's appeal contested the classification of Zinc Sulphate (Agriculture Grade) under Chapter Heading 28, arguing it should be classified under Chapter 38. The Tribunal upheld the Adjudicating Authority's detailed findings, which classified Zinc Sulphate (Agriculture Grade) under Chapter 28, citing CBEC Circular No.1022/10/2016-CX and Notification No.04/2006. The Tribunal emphasized that Zinc Sulphate (Agriculture Grade) is a single chemically defined compound and should be classified under Chapter 28, thereby exempting it from Excise Duty.

Conclusion:
The Tribunal upheld the classification of Micronutrients under Chapter Heading No.3105 and dismissed the Revenue's appeal. It agreed with the Adjudicating Authority's classification of Bio Fertilizers of Plant and Animal Origin under Chapter 31051000 and denied the SSI benefit for Pesticides/Fungicides of Chemical Origin due to the turnover exceeding the threshold limit. The Tribunal also upheld the classification of Zinc Sulphate (Agriculture Grade) under Chapter 28, exempting it from Excise Duty. All penalties against the appellant assessee were set aside as the issue was primarily about product classification.

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