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TMI Blog2005 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... il 97 to Mar. 2003 E/1411/2004 5,528,048 1,469,919 6,997,967 14/198/4 2. The brief facts of the case are as follows. M/s. P.J. Margo (P) Ltd. (PJM) are engaged in the manufacture of Econeem an excisable product. M/s. Margo Biocontrols Pvt. Ltd. (MBC) are engaged in the manufacture of Econeem, Delfium, Ecoderma, Ecohume, Ecohume-G and Pheramones, all excisable com modities. Revenue conducted certain investigations and proceeded against the appellants. Shri Pradeep Jaipuria is the Managing Director of M/s. P.J. Margo Pvt. Ltd. Shri Praveen Jaipuria is the Executive Director and Shri N.M.S. Babu, is authorized signatory of the same company. The main charges established by the adjudicating authority are the following. (a) The Value of clearances of both PJM and MDC is to be clubbed for the purpose of determining their eligibility to the benefit of SSI exemption Notification for the relevant period. Since the value of clearance so clubbed will cross the monetary limit, no exemption can be availed. (b) Activity of repacking of the product 'Pheromones" into smaller retail packs carried out by MDC amounts to manufacture and appropriate duty on the repacked items should be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the units. Hence their turnover cannot be clubbed. The Case Law referred in the case of Nikhildeep Cables P. Ltd. v. CCE reported in 1994 (70) E.L.T. 272. 5. The two units have different sales tax, income-tax, SSI registration numbers, etc. They are separate legal entity under Companies Act. Hence their clearances cannot be clubbed. The following case laws are relied on: (a) A.C. Pharmaceuticals Pvt. Ltd. v. CCE reported in 2003 (159) E.L.T. 1149. (b) Tapsya Steels P. Ltd v. CCE reported in 2004 (174) E.L.T. 108 (Tribunal) = 2004 (65) RLT 44. 6. The investment pattern of the units cannot be the basis for considering one unit as dummy. Moreover, there is no evidence of common funding and financial flow back. In fact, MBC is the loss making company. In these circumstances, the clearances cannot be clubbed. The following case laws are relied on: (a) Balsara Extrusions P. Ltd. v. CCL reported in 2001 (131) E.L.T. 586. (b) Spring Fresh Drink v. CCL reported in 1991 (54) E.L.T. 333. (c) Renu Tandon v. Union of India reported in 1993 (66) E.L.T. 375. 7. The fact of giving guarantee by PJM to MBC for taking loan cannot be the basis for clubbing. 8. The expenses incurred by PJM on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient that is to be satisfied is labeling of container while repacking from bulk to retail packs. The second may be re-labelling of the containers while repacking from bulk packs to retail packs. The third will be adoption of any other treatment to render the product market able to the consumer. In the light of the above decision, repacking does amount to manufacture as there is no labeling". 2. Only in one instance repacking was taken. Even assuming that the same amounts to manufacture MBC within the permissible turnover limits and hence they are not required to file any detail to the Department. D. Rectassification of Ecoderma and Ecohume 1. Ecoderma is a product based on soil micro-organisms. The Micro organisms are mass cultured under laboratory conditions and used for formulating the finished product Ecoderma. The heading note No. (D) (3) given in the Chapter Heading 30.02 in HSN clearly says that this heading includes cultures of micro-organism for technical purposes (e.g. for aiding plant growth). 2. The learned Advocate relied on the certificate issued by Fredrick Institute of Plant Protection and Toxicology (Fippat) recognized by DST, Ministry of Science and Technology, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In term of Chapter Note 6, it cannot be classified under 31.05 as other fertilizer. As Ecohume contains the above elements in insignificant amount, it is rightly classifiable under Heading 3101.00. 8. Assuming but not admitting that the Ecohume is classified as other fertilizers under 31.05, the same is exempted vide Notifications 4/1997, 5/1998, 6/1999, respectively for the years 1997-98, 1998-99 and 1999-2000. 9. The adjudicating authority has wrongly interpreted Notification 4/97 in denying the exemption. The particular entry in the table annexed to the notification is as follows. SL No. Chapter Heading Description of goods Rate of duty Remarks 42 31 All goods, other than those which are clearly not to be used - (a) as fertilizers; or (b) in the manufacture of other fertilizers, whether directly or through the stage of an intermediate product. NIL A very careful reading of the entry would show that the goods used as fertilizers would carry nil rate of duty. E. Limitations MBC intimated to the Department in their letter dated 20-7-1998 regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular dated 29-5- 1992, it has been clearly stated that limited companies whether public or private are separate entities, distinct from the shareholders composing it. Hence each limited company is a manufacturer by it self and will be entitled to a separate exemption limit. There is nothing in the circular clarifying that if one company is a subsidiary of the other, then both should be treated as one unit and the clearances should be clubbed. Therefore, the finding of the learned Commissioner that if one company is a subsidiary of the other, then their clearances should be clubbed is unwarranted. Hence, we set aside the Commissioner's finding in this regard. In our view, there are absolutely no grounds for clubbing the clearances. The Commissioners decision is against the Board's Circular and it cannot be sustained. In our view, as rightly contended by the learned Advocate the Supreme Court's decision in Gammon case (supra) is not applicable, as the same was in the context of Notification No. 85/85, dated 17-3-1985 wherein the clearances include even those on behalf of a manufacturer. In that context, the SC held that the clearances of subsidiary company would be deemed to be the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilizer, respectively. The Department contends that the items are classifiable under Heading 38.08 as fungicides/pesticides. The contention of the appellant is that fungicides/pesticides are synthetic chemicals meant to kill the pests and harmful and fungi, whereas Echoderma itself is a living fungi which can be killed by typical fungicide. Secondly, pesticides kill the target pests by poisoning them through different mode of action. Echoderma does not kill any fungi. It is a beneficial fast growth fungus which when applied to soil grows fast preventing other harmful fungi to attack the plant. In fact, Echo derma is a biochemical agent. According to the Central Insecticide Board, Echoderma is an antagonistic fungus. The appellants have produced enormous technical literature on the subject. The Fredrick Institute of Plant Protection and Toxicology has tested the item and stated that the same can be used as an antagonistic fungus for bio control. No reliance can be placed on the Chemical Examiner's Re port as it is on record that the concerned laboratory of the Department does not undertake testing for fungus and bacteria. Hence, in our view the classification of Echoderma under Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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