2021 (9) TMI 72 - AT - Central Excise

Classification of goods - chelated micronutrient mixtures - Chelated Zinc at 12% EDTA - Chelated Iron as 12% Fe EDTA - MNM Chelated - to be classified under Chapter Heading 3808 of CETA, 1985 or under CETA 3015 as other Fertilizers - N/N. 4/2006-CE dated 1.3.2006 - HELD THAT - The above issue was analyzed in the appellant s own in M/S. CARESS INDUSTRIES VERSUS COMMISSIONER OF GST CENTRAL EXCISE, SALEM 2018 (9) TMI 248 - CESTAT CHENNAI case for a different period wherein the Tribunal had held that in a recent decision of the Tribunal, in Commissioner of Central Excise, Hyderabad Vs. 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. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of chelated micronutrient mixtures.
2. Applicability of Central Excise duty exemption under specific notifications.
3. Previous adjudications on similar issues.

Detailed Analysis:

1. Classification of Chelated Micronutrient Mixtures:

The primary issue in the appeals concerns the classification of chelated micronutrient mixtures, specifically Chelated Zinc at 12% EDTA, Chelated Iron as 12% Fe EDTA, and MNM Chelated. The appellant contends that these products should be classified as "Other Fertilizers" under Chapter sub-heading 3105 90 of the Central Excise Tariff Act, 1985. This classification is based on the argument that the products contain nitrogen, an essential constituent, as required by Note 6 to Chapter 31. The appellant uses Ammonia in the manufacturing process, which contributes nitrogen to the final product. The purpose of chelation is to provide essential metal ions for plant development, meeting the criteria for fertilizers under the specified tariff heading.

2. Applicability of Central Excise Duty Exemption:

The appellant claims that under Notification No. 4/2006 C.EX. dated 01.03.2006, products falling under Chapter 31 and meeting the description in S.No.63 are exempt from Central Excise duty. This exemption was amended by Notification No. 4/2011C.E dated 01.03.2011 and further by Notification No. 12/2012 C.E dated 17.03.2012, maintaining the nil rate of duty for the specified goods. The appellant argues that since their products are used as fertilizers, they qualify for this exemption. However, the department directed the appellant to pay 1% duty from 01-03-2011, asserting that the products are "Plant Growth Regulators" under Chapter Heading 3808, which attracts a different duty rate.

3. Previous Adjudications on Similar Issues:

The appellant references a previous decision in their favor (Final Order No. 42339/2018 dated 04.09.2018) for the period April 2008 to August 2012, where the Tribunal upheld the classification of similar products under Chapter 31. The Tribunal had considered the presence of nitrogen, even in small percentages, as meeting the requirements of Note 6 to Chapter 31. The Tribunal's decision was influenced by the absence of a minimum percentage requirement for nitrogen in the CBEC circulars and the essential role of nitrogen in the products.

Tribunal's Findings:

Upon hearing both sides, the Tribunal reiterated its position from the previous adjudication, emphasizing that the essentiality of nitrogen in the products was not negated by its low percentage. The Tribunal found no reason to deviate from its earlier decision, which classified the products under CETA 31.05, as clarified in the CBEC Circular dated 06.04.2016. The Tribunal set aside the impugned orders and allowed the appeals with consequential reliefs, if any, as per law.

Conclusion:

The Tribunal upheld the appellant's classification of the chelated micronutrient mixtures as "Other Fertilizers" under Chapter sub-heading 3105 90, qualifying for the nil rate of duty under the relevant notifications. The Tribunal's decision was consistent with previous rulings and supported by the CBEC circulars, affirming the essential role of nitrogen in the products despite its low percentage. The appeals were allowed, providing the appellant with the requested reliefs.