2023 (5) TMI 299 - AT - Central Excise

Classification of goods - Zymegold Plus - Dripzyme - classifiable under CTH 3808 as Plant Growth Regulator or under CTH 3101 as Fertilizer? - HELD THAT - Presence of micronutrients in the products in issue has been taken against the appellants by the learned commissioner. It is interesting to note that plant growth regulators are grouped under CETH 38.08 alongwith other insecticides, fungicides, herbicides and disinfectants, all of which are intended to destroy pathogenic germs, insects, mosses and moulds, weeds, pests to achieve their results. They even considered as pesticides in some parts of the world whereas micronutrients are promoting only growth and health of the plant. A co-ordinate Bench of the Tribunal in the matter of CCE vs. M/s. Aries Agrovet Industries Ltd. 2017 (7) TMI 289 - CESTAT HYDERABAD , while taking note of the job etc. of micronutrients has come to the conclusion that micronutrients cannot modify inhibit retard the growth of plants like plant growth regulators and they only promote normal growth - therefore, the presence of micronutrients in the products in issue before us does not make them plant growth regulator. It is also found support on this from the decision of this Tribunal in the matter of COMMISSIONER OF CENTRAL EXCISE MUMBAI II VERSUS ARIES AGRO VET INDUSTRIES LTD 2018 (6) TMI 1070 - CESTAT MUMBAI in which it has been held that micronutrients and macronutrients are required for agriculture as fertilizers and micronutrients are not plant growth regulators. The department has taken resort to the definition of fertilizer as provided in Fertilizer Control Order, 1985 for changing the classification which, according to us, could not have been done as the definition provided in other statutes, totally unrelated to statute in issue, cannot be made the basis for changing the classification. If the appellants are not complying with or are in violation of any provision of the said order, then it is for the authority mentioned therein to take necessary steps but on that basis the classification cannot be changed at all as the Excise Act is a complete code in itself and the authorities herein have to act within the four corners of the said statute. The impugned order is liable to be set aside as the products in issue are fertilizers and therefore the appellants have rightly classified their products - Appeal allowed.

Summary

Issues Involved:
1. Classification of products Zymegold Plus and Dripzyme.
2. Applicability of previous Tribunal decisions.
3. Nature and composition of the products.
4. Relevance of trade parlance and expert opinions.
5. Comparison with Fertilizer Control Order, 1985.

Summary:

1. Classification of Products:
The core issue was whether Zymegold Plus and Dripzyme should be classified under CTH 3808 as 'Plant Growth Regulator' or under CTH 3101 as 'Fertilizer'. The Tribunal noted that fertilizers provide essential nutrients required for plant growth, whereas plant growth regulators modify plant growth without providing nutrition. The Tribunal found that Zymegold Plus and Dripzyme contain significant amounts of nutrients, including seaweed extract, which aligns with the characteristics of fertilizers.

2. Applicability of Previous Tribunal Decisions:
The Tribunal referred to its previous decision in the appellant's own case (Final Order No. A/85667-85668/2022 dated 29.7.2022), where it was held that Zymegold Plus, despite containing plant growth regulators in trace amounts, is classifiable as a fertilizer under CSH 3101. This precedent was found applicable to the current appeals, reinforcing the classification of the products as fertilizers.

3. Nature and Composition of the Products:
The Tribunal examined the composition of Zymegold Plus and Dripzyme, noting the presence of seaweed extract and other nutrients. The detailed composition analysis provided by the appellants showed that these products are primarily nutrient-based, supporting their classification as fertilizers. The Tribunal emphasized that the presence of micronutrients does not convert these products into plant growth regulators.

4. Relevance of Trade Parlance and Expert Opinions:
The Tribunal considered trade parlance and expert opinions, highlighting that the products are commercially known and marketed as fertilizers. The Tribunal cited the Supreme Court's stance that the popular understanding of a product by its users should guide its classification, rather than scientific or technical definitions.

5. Comparison with Fertilizer Control Order, 1985:
The Tribunal rejected the department's attempt to use the definition of 'fertilizer' from the Fertilizer Control Order, 1985, for reclassification purposes. It was stated that definitions in unrelated statutes cannot be the basis for changing classification under the Excise Act, which is a complete code in itself.

Conclusion:
The Tribunal set aside the impugned order, holding that Zymegold Plus and Dripzyme are fertilizers and should be classified under CSH 3101. The appeals were allowed with consequential relief as per law.