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TMI Blog2018 (9) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhu Mohan Damodhar, Member (Technical) Ms. L. Maithili, Advocate for the Appellant Shri B. Balamurugan, AC (AR) for the Respondent ORDER Per Bench The facts of the case are that the appellants are manufacturers of Micronutrients and availing SSI exemption. Pursuant to audit, it emerged that the appellants were also engaged in manufacture of Chelated Zinc as 12%, Chelated Iron as 12% Fe, mixture of Chelated substance. It emerged that appellants are manufacturing the said products under nil rate of duty vide Notification No. 4/2006-CE dated 1.3.2006 classifying the same under Central Excise Tariff Heading 3105 as other fertilizers . Department took a view that the products would appropriately fall as Plant Growth Regulators‟ under CETA 3808 9340. Proceedings initiated by issue of a show cause notice culminated in an order dated 20.11.2013 by adjudicating authority inter alia holding that the goods are classifiable only as Plant Growth Regulators‟ under CETA 38089340, confirming the differential duty of ₹ 14,95,381/-, along with interest thereon and imposition of equal penalty under section 11AC of Central Excise Act, 1944. In appeal, Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner has made an unfounded assumption that that the subject goods are a type of plant growth regulators viz. Gibberellins which are plant hormones that promotes overall growth of plant, apart from being baseless also goes beyond the department‟s case in the show cause notice and in the Order-in-Original. There is no material on record to suggest that the subject goods contain any Gibberellins. In fact, there is no dispute that the subject goods are micronutrient mixtures containing Nitrogen. This fact stands established by the Test results of the technical analysis by the Chemical Examiner, Customs House Laboratory, Chennai relied upon by the department. 2.5 The classification of the subject goods under Chapter heading 3808 stands excluded by the operation of Note 1 to Chapter 38, which stipulates that the said Chapter heading will apply only to separate chemically defined compounds, which admittedly, the subject goods are not. Micronutrients manufactured by the Appellant by using chelating agents are mixtures and not chemically defined compounds. 2.6 Even otherwise the demand is substantially time barred, the extended period of limitation not being invocable when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be classified under CETA 3015. Subsequent to the judgment in Ranadey Micronutrients, Board had issued one more circular on 19.5.1998. Yet another circular was issued on 6.4.2016 wherein inter alia it was clarified that for classification under Chapter 31, at least one of the elements namely Nitrogen, Phosphorous or Potassium should be an essential constituent of the fertilizer. 5.1 From the test reports of the Customs Laboratory found in the file, it is seen that the percentage of Nitrogen in chelated zinc has been found at 1.8%, in MNM chelated as 2.5% and in chelated iron it is 3.3% with regard to test report dated 1.4.2013. One of the main ground for the view taken in the impugned order is that though nitrogen is present in the impugned goods, it is present in very low percentage which is not sufficient to be called as essential constituent of the fertilizer. We, however, find that the ld. Advocate is correct in her assertion that there being no minimum prescribed percentage of Nitrogen etc. prescribed in Note 6 to Chapter 6 of the Central Excise Tariff Act, the requirements of that Note being classified as micronutrient in other fertilizers, CETA 31.05 are satisfied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these plant foods are divided into three classes - (1) Primary-Nitrogen (N), Phosphorous (P) and Potassium (K), (2) Secondary - Calcium (Ca), Magnesium (Mg) and Sulphur (S), and (3) Minor or so called micronutrients - Iron (Fe), Manganese (Mn), Copper (Cu), Zinc (Zn), Boron (B) and Molybdenum (Mo). However, for the purpose of classification of micronutrients as Other Fertilizers‟ in Heading 31.05 of CET, the scope of the term Other Fertilizers‟ has to be determined in the light of Note 6 of Chapter 31. Further, the specific exclusion of separate chemically defined compounds as laid down in the HSN Explanatory Notes to Heading 3105.90, must also be borne in mind. If the micronutrient is a separate chemically defined compound, it will be classifiable under Chapter 28/29. If not so, and if in accordance with Note 8 to Chapter 31, it contains N, P or K, it will be classifiable under Chapter Heading 31. 8.3 In the cases before us, proceedings have been initiated by department referring to these circulars and alleging that Nitrogen is present in the impugned goods of the respondents in smaller quantity only, in the form of diamine and the goods will not function as nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/10/2016-CX, dated 6-4-2016, on the very issue of classification of micronutrients, plant growth regulators, etc. In the first para itself, the circular acknowledges that the issue of classification of these items remain a disputed area in Central Excise. On the basis of opinion obtained from Indian Agricultural Research Institute (IARI), Central Excise Tariff explanatory notes, nature, usage, etc., the C.B.E. C. has clarified, inter alia, that micronutrients are essential nutrients and required in small quantities for the normal growth and development of plants containing elements like iron, Manganese, Zinc, Copper, Boron, Molybdenum, Nickel, etc. Board has also acknowledged that these micronutrients are sold in the market as micronutrient fertiliser. It has, however, clarified that for classification under Chapter 31, at least one of the elements viz; Nitrogen, phosphorous or potassium should be an essential constituent of the fertiliser. Board has also clearly differentiated plant growth regulators as organic compound other than nutrients which affect the physiological process of growth and development in plants. Board has further clarified, in para 6 therein, that its past ..... X X X X Extracts X X X X X X X X Extracts X X X X
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