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TMI Blog2018 (11) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... not denied that the impugned product is an extract of plants, it is correct to classify the same under Chapter 13 of CTH. Moreover, as the goods were certified not to be biofertilizers, the classification claimed by the appellants under Chapter 31 is squarely excluded. The impugned product is classifiable under CTH 13021990. Extended period of limitation - Held that:- Having assessed that Bill of Entry provisionally, it was open to the department to keep an alert in the system to interdict subsequent Bills of Entry. Having failed to do so, department cannot allege suppression on the part of the importer. Therefore, the demand needs to be restricted to the normal period. Whether the Ld. Commissioner erred in not imposing fine in lieu of confiscation and penalty? - Held that:- The goods in respect of Bill of Entry 740088 dt.6.1.2009 were seized and were provisionally released and therefore, in view of the Hon’ble Supreme Court’s decision in the case of Weston Components Ltd. vs. CC [2000 (1) TMI 45 - SUPREME COURT OF INDIA], the adjudicating authority should have imposed redemption fine. Appeal allowed in part. - C/523/2010 & C/606/2010 - A/87651-87652/2018 - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods and in not imposing penalty. Both the appeals have been taken together for decision. 4. Ld. Counsel for the appellant submitted that as per section notes or chapter notes CTH 31010099, there is no condition that the product needs to supply primary nutrients N,P,K and that it needs to be covered under Fertilizer Control Order (FCO); FCO does not define vegetable fertilizer as such; FCO is a piece of social legislation under Section 3 of the Essential Commodities Act, 1955 to regulate trade and prices of certain fertilizers for the benefit of farming community; products do not cease to be fertilizer merely because, it is not covered under FCO; it simply means that in respect of fertilizers not included in FCO the control mentioned in FCO cannot be exercised by government; only a subset of bio fertilizers and organic fertilizers has been included in Schedule III and IV of FCO to regular their market and prices. 4.1 Definition of fertilizer under FCO has a functional definition and a list specific definition; Under FCO, Fertilizer should satisfy two conditions which are joined by the conjunction and in above definitions. (i) It should be a substance used or intended to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d large, extracts in purer form which are used as a raw material for preparation of end products down the line in products meant for human consumption either as a drug or medicine or in food preparations. Further the end products prepared from the raw material of these headings are not classified here rather they are classified in more specific entries based on their usage. The chapter note of Chapter 13 makes this abundantly clear that 13.02 covers only those plant extracts which are in the form of raw material and it does not cover end products made out of these raw materials; the impugned product is not a raw material but an end product itself to be used as a fertilizer and not going to be used as an input in any product meant for human consumption; therefore, cannot be covered under CTH 13.02; it is class apart from the products which are covered under CTH 13.02. 4.7 The six-digit entry 13021 at level falling under vegetable Saps and extracts has been divided into following four entries at ---level which are mutually exclusive. ---extracts ---Cashew shell liquid (CNSL), crude ---Purified and distilled CNSL (Cardanol) ---Other (1302 1990) 4.8 Ld. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Heading 31.01: Animal or vegetable fertilizers, whether or not mixed together or chemically treated; fertilizers produced by the mixing or chemical treatment of animal or vegetable products. Tariff Heading 3808: Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparation s or articles (for example, sulphus-treated bands, wicks and candles, and fly-papers) HSN Explanatory Notes This heading covers: (a) Animal or vegetable fertilizers, whether or not mixed together or chemically treated; (b) Animal or vegetable products converted into fertilizers by mixing together or chemical treatment (other than bone superphosphates of heading 31.03) Note: The products covered under chapter 31 are only intended for enhanced growth and not intended for adverse growth as in case of PGRs. HSN Explanatory Notes The heading further covers anti-sprouting products and plant growth regulators intended to inhibit or promote physiological processes in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tic compounds and are applied directly to a plant to alter its life processes or structure in some beneficial way so as to enhance yield, improve quality, or facilitate harvesting. Plant hormones i.e., phytohormones, are plant-produced growth regulators and therefore, are naturally occurring plant substances, Plant-growth regulators, however, apply to phytohormones as well as synthetic compounds. 1. Plant Physiology (4th Edition) by Robert M. Devlin Francis H. Witham gives the following description for Plant Growth Regulators:- 2. Plant regulators are organic compounds other than nutrients that in small amounts promote, inhibit, or otherwise modify a physiological process in plants. Note: The PGRs do not provide nutrients to plants rather promote or inhibit growth of specific parts of plants. From the above definitions, HSN Explanatory Notes, it can be said that the fertilizers help in overall growth of the plants. It is inferred that fertilizers provide nutrients to soil making it more fertile and thus provide overall growth of plants. From the above definitions, HSN Explanatory Notes, it can be said that the PGRs help in selective grow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relied upon. In view of the Chapter Note (b) the impugned goods do not fall under Chapter 31. He relied upon Weston components Ltd. vs. CC, New Delhi: 2000 (115) ELT 278 (SC) wherein it was held that redemption fine is imposable on goods even when they were provisionally released. He submitted copies of extracts of Chapter Notes, Section Notes and HSN Explanatory Notes. 6. Heard both sides and perused the records of the case. The brief issues for consideration before us are (i) Whether the impugned goods are plant extract classifiable Under CTH 13021990 or as bio fertilizer under CTH31010099; (ii) Whether the Ld. Commissioner erred in not imposing fine in lieu of confiscation and penalty. 6.1 We find that the appellants have classified the product under chapter 31. They have submitted that the impugned product is manufactured out of herbs like sopnora, fiavescnes, milleazevacarh, stemona, tuberos etc. which are collected during the typhoon period in China and crushed to get extracts which are further processed to get the product under consideration. They also submitted that the imported product helps healthy growth of plant free from diseases, thereby increa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for use other than as fertilizers. (3) Rotted vegetable products, unsuitable for use other than as fertilizers. (4) Disintegrated guano. (5) Products resulting from the treatment of leather with sulphuric acid. (6) Compost consisting of rotted waste vegetable and other matter where decay has been accelerated or controlled by treatment with lime, etc. (7) Wool scouring residues. (8) Mixtures of dried blood and bone meal. (9) Stabilised sewage sludge from urban effluent treatment plants. Stabilised sewage sludge is obtained by screening the sewage effluent to remove large objects and settling out grit and heavy non-biological constituents; the remaining sludge is then allowed to air dry or is filtered. The Stabilised sludge so obtained contains a high proportion of organic matter and also contains some fertilising elements (e.g., phosphorus and nitrogen). However, such sludge containing other materials (e.g., heavy metals) at a high concentration, which make the Stabilised sludge unfit for use as fertilizers , is excluded (heading 38.25). 6.3 From the above, it can be seen that the impugned product cannot be grouped under Chapter 31 due to the genesis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally assessed. The Revenue has taken a plea that the Bills of Entry were filed under the self-assessment regime, therefore, the onus to classify correctly was on the importer; the importer described the goods as biofertilizers to mislead the department and to evade payment of duty; and as the importer has not declared the true nature of the goods and has not classified the goods correctly, extended period is invokable as the importer has suppressed the material fact. We find that of all the six Bills of Entry, the goods imported under 740088 dt.6.1.2009 were seized and provisionally released. Revenue claimed that the assessment was done by the importer himself and the Bills of Entry were cleared under RMS, department has no knowledge of the wrongful doings of the importer. However, we find that 894541 dt.1.7.2008 was provisionally assessed by the Group pending test report. Therefore, it is very clear that the department was very much aware of the impugned products and has sent for test. However, the results of such test reports are not forthcoming in the records. Having assessed that Bill of Entry provisionally, it was open to the department to keep an alert in the system to inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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