2019 (4) TMI 468 - AT - Central Excise

Classification of goods - Potassium Sulphate - Mono Ammonium Phosphate - whether classified under Chapter 28 or under chapter 31 of Central Excise Tariff Act, 1985 or otherwise? - Held that - The samples of the said product have been subjected to chemical test in the Fertilizer Testing Laboratory, Pune, Government of Maharashtra, wherein the test result revealed that the tested products were fertilizers since these products satisfied the parameters prescribed under Fertilizer Control Orders - Further, in the impugned order the Learned Commissioner (Appeals) took into consideration other evidences like the use of the said product by the buyers namely, M/s. RCF Ltd., wherein it has been informed by M/s. RCF that the same are used as fertilizers. Besides the Learned Commissioner (Appeals) during the course of hearing obtained a report from the Field formation about the classification of the product, which were tested to be fertilizers in the Govt. laboratory. In the report, the jurisdictional Assistant Commissioner has informed that the products merit classification under Chapter 31 of Central Excise Tariff Act, 1985. Even though in the grounds of appeal, the Revenue has claimed that the test reports cannot be relied upon since the samples were not drawn in the presence of the officers of the Department, we do not understand as to why department has not independently drew samples before and during issue of periodical demand notices of the respondent from time to time - In absence of any contrary test report, we do not find merit in not accepting the test report of the Fertilizer Testing Laboratory, Pune Govt. of Maharashtra that products in question are fertilizers. Appeal dismissed - decided against Revenue.

Summary

Issues: Classification of products under Chapter 28 as chemicals or Chapter 31 as fertilizers.

The judgment revolves around the classification of products, specifically Potassium Nitrate and Mono Potassium Phosphate, under Chapter 28 as chemicals or Chapter 31 as fertilizers. The case originated from the appellant's classification of the products under Chapter 28 prior to May 2007, with subsequent claims for classification under Chapter 31 as fertilizers and exemption under Entry No. 63 of Notification No. 4/2006-C.E. The Assistant Commissioner initially classified the products under specific sub-headings of the Central Excise Tariff Act, 1985. Disputes arose regarding the classification under Chapter 28 for Potassium Nitrate and Mono Potassium Phosphate, leading to appeals and show cause notices demanding duty, interest, and penalty. The Commissioner (Appeals) favored the respondent, prompting the Revenue to appeal.

The main issue addressed in the judgment was whether the products should be classified under Chapter 28 as chemicals or Chapter 31 as fertilizers. The Fertilizer Testing Laboratory in Pune conducted tests on the products, concluding that they met the parameters set for fertilizers under Fertilizer Control Orders. Additionally, evidence regarding the use of the products by buyers, such as RCF Ltd., supported their classification as fertilizers. The jurisdictional Assistant Commissioner also reported that the products should be classified under Chapter 31. Despite the Revenue's argument against relying on the test reports due to sampling procedures, the Tribunal found no reason to dispute the findings. The absence of contrary test reports and the supporting evidence led the Tribunal to uphold the classification of the products as fertilizers under Chapter 31.

In conclusion, the Tribunal dismissed the Revenue's appeals, stating they lacked merit. The judgment highlighted the importance of test reports, buyer usage evidence, and expert opinions in determining the classification of products under the Central Excise Tariff Act, 1985. The decision emphasized the need for substantial evidence and proper procedures in classification disputes to ensure fair and accurate outcomes in excise matters.