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TMI Blog2018 (12) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... 11791/2014-DB, (Application No. E/Ors/10312/2018) - Interim Order No. 71-72/2018 - Dated:- 24-10-2018 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) Shri Devan Parikh Shri Vinay Kansara, Advocates for the Appellant Shri Sameer Chitkara, Additional Commissioner (AR) for the Respondent ORDER Per: Raju These appeals have been filed by M/s. Isagro (India) Agrochemicals Pvt. Limited against the confirmation of demand of excise duty, interest and imposition of penalty under Section 25 of Central Excise Rules, 2002. 2. Ld. Counsel for the appellant pointed out that the appellants are engaged in the manufacture of agrochemical products. The appellant imported the product namely Siapton 10L under Chapter heading 31010099. After bringing the said product in the factory they carry out activity such as repacking from bulk pack to small packs and also carry out labeling activity. After repacking from bulk to small retail packs, they were clearing the goods without payment of duty under the same Chapter heading in which the said product is imported in bulk pack. He pointed out that in Chapter 31, there is no provision for deemed manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents and peptides are nothing else but short chain amino acids. He argued that almost 86% of the active ingredient content in the product is amino acids of one form or another. He argued that in such a case, the product can only be considered as fertilizer. He further argued that Customs have classified the product under Chapter heading 310199 as other fertilizers and have consistently classified the product under heading 31010099 as fertilizer in all the imports. He argued that merely repacking of the product, which according to the Customs is fertilizer, cannot change it to Plant Growth Regulator. He pointed out that the product is imported in a liquid form in 200Ltr drums and the same is repacked in 50ml, 100ml, 250ml, 500ml etc. He further argued that in 2003, the Central Excise authorities took a view that activities are excisable and the same were assessed provisionally. Subsequently, the assessments were finalized by the Deputy Commissioner of Central Excise in favour of the appellant. Ld. Counsel further argued that the entire bunch of technical material relied upon by the Commissioner is based on Wikipedia. He pointed out that Wikipedia does not profess any legal or authen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of specific orders to classify under heading 38089340, demand cannot be confirmed. Ld. Counsel submits that the Customs have assessed the product and allowed to remove the product under Chapter heading 31010099, the Excise authorities cannot change the classification. Ld. Counsel submits that in these circumstances, penalty cannot be imposed as there was no intention to evade duty nor was there any suppression of fact or willful mis-statement. He argued that in this situation two views are possible regarding classification. 4. Ld. AR relies on the impugned order. He pointed out that none of the documents/papers, technical literature of the assessee indicated Siapton 10L as fertilizer. He pointed out that clause 13 of the Fertilizer Order 1985 wherein it has been specifically prescribed that every manufacturer/ importer and pool handling agency shall, in regard to packing and marking of containers of fertilizers, Bio-fertilizer or Organic fertilizer comply with the following requirement:- (a) Every container in which any fertilizer is packed shall conspicuously be superscribed with the word FERTILIZER and shall bear only lsuch particulars and unless otherwise require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hesis in plants and also helps in Cell growth. (iv) It does not appear to increase the fertility of soil as is in the case of fertilizers. It works directly on the plants. (v) Significantly it is not covered as a fertilizer in Fertilizer Control Order, 1985, where the fertilizers are covered. It is, therefore, obvious that statute does not recognise Dhanzyme as a fertilizer . The Commissioner appears to have held plant growth promoter to be synonymous with plant growth regulator. He has fallen into a patent error here. A plant growth promoter will only promote growth of the plant and will not inhibit it. On the other hand, a plant growth regulator can inhibit, promote or otherwise alter physiological processes in plants. The relevant HSN Note is clear to this effect. Kirk-Othmer Encyclopaedia of Chemical Technology (3rd Edition - Volume 18) introduces PGRs as follows : Plant-growth regulators, other than nutrients, usually are organic compounds. They are either natural or synthetic 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. Pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract powder, the Dhanzyme liquid used for spray over Bentonite clay granules had a seaweed origin. It is seen that most of the issues are identical except for the fact that in the said case, the product was applied to soil whereas, in the instant case, the product is directly sprayed on plants/trees. In the aforesaid order, citing Kirk-Othmer Encyclopedia of Chemical Technology , it has been stated that Plant Growth Regulators are directly applied to plants. In the said case, Revenue has relied on the fact that product in dispute in the said case, namely Dhanzyme, is applied to soil and not directly to the plant, to claim that the product is not PGR, as PGRs are applied directly to the plant. Thus, in the present case, the facts are different in the very significant aspects of the manner of use of the product. As already seen from the product literature description, Siapton 10L is added to a small amount of water under stirring, then add the remaining quantity of water under stirring to make the required spray volume. It can be applied using any commonly used high volume sprayers. Continuous agitation is required while spraying. Siapton 10L is compatible with commonly used ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f fruits etc. Synthetic organic chemicals are also used as PGRs and are industrially produced and marketed. A list of some of the PGRs industrially produced in India is enclosed with the reply of IARI. 3.2 It would thus be noted that PGRs are different from nutrients, be it macronutrient or micronutrient. The difference between PGR and micronutrient has been clearly brought out in the reply from ICAR. PGR as a substance is specifically covered under CETH 3808. More specifically, Gibberellic acid and Plant Growth regulators are respectively covered under tariff item 3808 9330 and 3808 9340. 4. Fertilizers are classified under chapter 31 of the Central Excise Tariff and for this purpose they may inter alia be minerals or chemical fertilizers - nitrogenous (CETH 3102), phosphatic (CETH 3103), potassic (CETH 3104) or fertilizers consisting of two or three of the fertilizing elements namely nitrogen, phosphorous and potassium; other fertilizers (CETH 3105). For the purpose of classification of any product as other fertilizers , chapter note 6 of Chapter 31 is relevant which provides that the term other fertilizers applies only to products of a kind used as fertilizers and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tages, fruit settling and maturation of seeds. The functions, as stated here, clearly indicate that Dhanzyme regulates various activities of the plants from vegetative to reproductive stages. (iii) It enhances photosynthesis in plants and also helps in Cell growth. (iv) It does not appear to increase the fertility of soil as is in the case of fertilizers. It works directly on the plants. (v) Significantly it is not covered as a fertilizer in Fertilizer Control Order, 1985, where the fertilizers are covered. It is, therefore, obvious that statute does not recognise Dhanzyme as a fertilizer . The Commissioner appears to have held plant growth promoter to be synonymous with plant growth regulator. He has fallen into a patent error here. A plant growth promoter will only promote growth of the plant and will not inhibit it. On the other hand, a plant growth regulator can inhibit, promote or otherwise alter physiological processes in plants. The relevant HSN Note is clear to this effect. Kirk-Othmer Encyclopaedia of Chemical Technology (3rd Edition - Volume 18) introduces PGRs as follows : Plant-growth regulators, other than nutrients, usually are organic compounds. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from Canada, which was sought to be classified by Customs authorities under ITC (HS) 31010000. Whether supplied by the Biozyme manufacturers or formulated by the appellants themselves from the imported seaweed extract powder, the Dhanzyme liquid used for spray over Bentonite clay granules had a seaweed origin. From the above, it is seen that Tribunal holds that the PGR should be able to simultaneously accelerate and retard the growth of plant. The appears to be an erroneous finding. A perusal of the list of marketed PGRs attached to the Circular No. 1022/10/2016-CX dated 02.04.2016 is reproduced below:- Table 1 : LIST OF MARKETED PLANT GROWTH REGULANTS WITH ACTIVE INGREDIENT/S Active ingredient/Formulation/Concentrate Product Name Company Name Crops AUXINS 2-(1-naphthyl)acetic acid SL 45 g/l Planofix Apple, Pear, Pineapple 4-indol-3-ylbutyric DP 1 g/kg Seradix B Ornamentals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cotton Chlormequat chloride SL 750 g/l CeCeCe 750 Pear, Wheat Chlormequat chloride/ethephon SL 300/150 g/l Uprite Wheat DEFOLIANTS Thidiazuron/diuron SC 120/60 g/l Dropp Ultra Cotton GROWTH STIMULATORS Brassinolide SL 0.1% Double Agril. and Hortil. crops *SL - Liquid Suspension; WP - Wettable Powder; EC - Emulsifiable Concentrate; DP - Powder Dust. It is apparent that most PGR perform only one function of either retarding growth or inhibiting growt or, deflolianting or stimulating growth. Thus, the observation of Tribunal in the said case appears to be misplaced. The said decision has been approved by the Hon'ble Apex Court, however, the approval of Hon'ble Apex Court does not mean ..... X X X X Extracts X X X X X X X X Extracts X X X X
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