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TMI Blog2024 (9) TMI 1655X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Tariff Item [ETI] 3101 00 99 of the First Schedule to the Central Excise Tariff Act, 1985 [the Excise Tariff]. The department, however, believed that the product was a plant bio-stimulant and appeared to be a "plant growth regulator", which would be covered under ETI 3808 93 40. Show cause notices were, accordingly, issued to P.I. Industries requiring it to pay central excise duty as it had cleared the goods without payment of duty by classifying them as "fertilizer" instead of "plant growth regulator". The Commissioner confirmed the demand of central excise duty holding that the product was a plant growth regulator and not a fertilizer. P.I. Industries has assailed this order of the Commissioner in these four appeals. 2. Excise Appeal No's. 11643 of 2013 and 11644 of 2013 have been filed by M/s. Agro Pack [Agro Pack] and its Authorized Signatory Parth H. Patel. Agro Pack had classified the final product "Isabion" as "fertilizer" under ETI 3101 00 99. Show cause notices were issued and ultimately the Commissioner directed for classification of the product Isabion under ETI 3808 93 40 as a "plant growth regulator" and not as a "fertilizer" under ETI 3101 00 99. This o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Northern Minerals the product was applied to soil, whereas in the appeals being heard by the Division Bench, the product was to be directly sprayed on plants/trees. The Division Bench observed that a plant growth promoter, so long as it promotes growth by altering the life processes of plant, will be a plant growth regulator and that it is not necessary that it should also be able to inhibit or otherwise modify (apart from promoting) plant processes. The observations made by the Division Bench in the referring order are as follows: "5. We have gone through the rival submissions. The appellants imported Siapton 10L in 200Ltr drums and the same is repacked and sold by them. The appellant sought classification of the product under Chapter heading 31 where repacking, labeling does not amount to manufacture, while the Revenue has sought to classify the product under Chapter heading 38 where repacking, labeling etc. amounts to manufacture. Chapter 31 covers fertilizers whereas Chapter 38, inter-alia, covers Plant Growth Regulator. It is not disputed that product Siapton 10L consists of various amino acids. ***** ***** It is seen that most of the issues are identical except for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... description clearly lays down that there are multiple ways the plant physiological processes can be altered. Moreover, the HSN also makes it clear that apart from Hormones other "Synthetic Organic Chemicals" can also be PGRs.***** ***** From the above, it is seen that Tribunal holds that the PGR should be able to simultaneously accelerate and retard the growth of plant. This appears to be an erroneous finding. ***** ***** It is apparent that most PGR perform only one function of either retarding growth or inhibiting growth 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 approval of all grounds of the order. In the said case, the product was being applied to soil as against the fact that PGRs are not applied to soil but directly to plant. A fact recorded in the said order, in Para 7.3, reproduced above. Thus in the said case the facts were different on a crucial issue. ***** A plant growth promoter, so long as it promotes growth by altering the life processes of plant, will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er bringing the said product in the factory, it carried out activity of re-packing from bulk pack to small packs and also carried out labeling activity. P.I. Industries, thereafter, removed the product from the factory without payment of duty as there is no deeming fiction of "manufacture" in Chapter 31 of the Excise Tariff. The audit party, however, believed that the product was a "plant growth regulator" falling under Chapter Heading 3808 of the Excise Tariff attracting excise duty. 12. The show cause notice dated 16.09.2009 issued to P.I. Industries, contains the following allegations: "3/- Whereas on going through the said technical documents/papers, it was noticed that the Siapton 10L is defined as a unique product of natural origin having multiple activities as a "plant biostimulant", an anti stress agent, a nutritional equilibrator and enhancer in the improved use of macro and micro elements and as an indirect improver of activity of some enzymatic systems to bring about a tremendous boost in quality and quantity of the product. But none of the said documents/papers (technical literature) indicate that Siapton 10L is fertilizer ***** 4/- Whereas the description give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and also from above referred various field studies that "SIAPTON 10L" a) It is a Biostimulant. b) It constituents mainly organic fraction. c) It is used directly through leaves i.e. foliar applications. d) It influences various physiological processes in plants. e) It increases growth and yield. I find that "SIAPTON 10L" being a Biostimulant cannot be a Fertilizer/Plant growth Promoter/Nutrient by virtue of my findings in regards to Biostimulants in foregoing paras 18 and 18.1 and also on account that fertilizers are used in soil, while "SIAPTON 10L" is used through foliar application/drip irrigation. "SIAPTON 10L" has also satisfied the three main characteristics of "Plant Growth Regulator" i.e. it constituents mainly organic fraction; it is used directly i.e. foliar application, and It influences various physiological processes/metabolic processes in plants, which further help in increasing growth and yield of plants. Thus I find that the department has rightly alleged that "SIAPTON 10L" is a "Plant Growth Regulator" which merits classification under chapter heading 3808. 93 of the Central Excise Tariff Act, attracting applicable Central Excise duty. 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Received 711010088 05/Jan./2011 Sample Name SIAPTON 10L (B.No. 15A-372 mfg.20.12.2010 & Exp. 19.12.2012) Condition of Sample Packed in Plastic Bottle Test Performance Date 10/Jan./2011 To 01/Mar./2011 Sr. No. Name of Test Result Method of Analysis Equipment Used Plant Growth Regulators 1 Indol Acetic Acid Not Detected SOP No. QP/DALPL/098 HPLC 2 Gibberellic Acid Not Detected SOP No. QP/DALPL/098 HPLC 3 1-Naphthyl Acetic Acid(NAA) Not Detected SOP No. QP/DALPL/098 HPLC 4 6-Benzyladenine Not Detected SOP No. QP/DALPL/098 HPLC 5 Hydrogen Cynamide Not Detected SOP No. QP/DALPL/214 LCMS/MS 6 Ethephon Not Detected SOP No. QP/DALPL/214 LCMS/MS 7 Florchlorfenuron Not Detected SOP No. QP/DALPL/214 LCMS/MS 8 Mepiquate Chloride Not Detected SOP No. QP/DALPL/214 LCMS/MS 9 Paclobutrazole Not Detected SOP No. QP/DALPL/214 LCMS/MS 10 Triacontanol Not Detected SOP No. QP/DALPL/214 GCMS/MS 11 Chlormequat Chloride Not Detecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r more specific physiological processes within a plant". A further definition is : "plant growth regulators (also known as growth regulators or plant naturally produced by plants, substances that control normal plant functions, such as root growth, used to alter the growth of a plant or plant part. Hormones are substances naturally produced by plants, substance that control normal plant functions, such as root growth, fruit set and drop, growth and other development processes. SIAPTON 10L does not modify, or control or alter any physiological process; it just provides Nitrogen (in an organic form for an improved up-take and utilization) and does what nitrogen does: improved crop growth and yield. SIAPTON 10L instead of providing the element alone, provides Nitrogen in an organic form (amino acids and peptides) so it provides the building blocks for an improved growth. ***** We conclude that the classification of SIAPTON 10L as PGR is not appropriate, being the classification as "FERTILISER" the most and only appropriate in consideration of the product characteristics. It is, indeed, the classification universally accepted as demonstrated above." (emphasis supplied) ISABION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fruits on every kind of crops and recommended during the active growth phases of the production cycle i.e. they alter the physiology of various parts of plants. - It helps in mitigating the damage done by hail, phyto-toxicity, parasites and diseases, drought, etc. I find that "Isabion" being a Biostimulant cannot be a Fertilizer/Plant growth Promoter/Nutrient by virtue of my findings in regards to Biostimulants in foregoing paras and also on account that fertilizers are used in soil, while "Isabion" is used also through foliar application. I find that Biostimulant, Plant Biochemical Regulators and Plant Growth Regulators are treated on equal footing and "Isabion" has also satisfied the three main characteristics of "Plant Growth Regulator" i.e. it constituents mainly organic fraction; It is used directly i.e. foliar application, and It influences various physiological processes/metabolic processes in plants. Thus I find that the department has rightly alleged that "Isabion" is a "Plant Growth Regulator" which merits classification under chapter heading 3808 93 of the Central Excise Tariff Act, attracting applicable Central Excise duty." (emphasis supplied) 22. According to Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transplantation, flowering, fruit-setting, ripening are the most important. Foliar spray: 200-300 ml/100 L of water (For more details on application refer attached Isabion Booklet). Chemical Composition: Organic fraction derived from amino acids, peptides mixture 62.5% w/w Inorganic faction and aqua 37.5% w/w Total 100% w/w" 25. During the audit, a sample of Isabion was drawn and forwarded to the Chemical Examiner, Central Excise & Customs Laboratory at Vadodara. As per the said report, Isabion contains nitrogen, potassium and phosphorus. Syngenta also obtained analytical test report on chemical analysis of Isabion and the said report dated 10.07.2018 concludes that Isabion contains 58% free amino acid with nitrogen, phosphorus and potassium content as 11.024%, 00.37% and 0.041%, respectively. 26. Agro Pack has also placed on record the Fertilizer (Organic, Inorganic and Mixed) (Control) Amendment Order, 2021 which introduced "bio-stimulant" under the broad category of "fertilizers". Bio-stimulant have been described as: "(ab) "biostimulant" means a substance or microorganism or a combination of both whose primary function when applied to plants, seeds or rhizosp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulators Kg. 8% 30. It would be seen that the description of goods under ETH 3101 is "animal or vegetable fertilizers" while the description of goods under ETH 3808 are insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products. Plant growth regulators are described under ETI 3808 93 40. 31. It is in the light of the aforesaid that the submissions that have been advanced by the learned counsel appearing for P.I. Industries and Agro Pack and the learned authorized representative appearing for the department have to be considered. 32. The Division Bench, while referring the matter to the Larger Bench, noticed that the decision of the Tribunal in Northern Minerals would not help the appellant for the reason that in that case the product was applied to soil while in the appeals that were being heard by the Division Bench the product was directly sprayed on plants/trees. 33. The issue, therefore, that would arise for consideration is whether the mode of usage of the product through soil or foliar application is a determinative test for classifying the goods under ETI 3101 00 99 or ETI 3808 93 43. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required when compared to application through the soil. Upon foliar application of the macronutrient fertilizer, the nutrients enter the leaves through the stomata, correct the disorders, and improve the yield and quality of the produce. Urea is generally suitable for foliar application owing to its high solubility, ease, and quick absorption by the plant tissue. 37. It is an undisputed fact that plants absorb nutrients through their roots or foliage. Generally, in situations where soil conditions are not favorable, it is desirable to make foliar applications of the plant nutrients. 38. It is also important to notice that plant growth regulators are also used for soil and foliar applications. The EU Explanatory Note to ETI 3808 93 90 makes it aptly clear that the plant growth regulators can be applied to the whole plant or parts of the plant or to the soil. 39. Thus, the test based on mode of application would not be a correct test. 40. It now needs to be examined whether the two products, namely, Siapton 10L and Isabion are fertilizers or plant growth regulators. 41. P.I. Industries has stated that the product Siapton 10L has amino acids alone. It has clarified that 54% of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) (Control) Order, 1985. In this connection, it needs to be noted that "bio-stimulants", being a fertilizer, was brought under this Control Order by Order dated 23.02.2021 issued by Ministry of Agriculture and Farmers Welfare. The definition of "bio-stimulants" contained in the aforesaid Order excludes plant growth regulator, which have been stated to be regulated under the Insecticides Act, 1968. It is true that the aforesaid definition of "bio-stimulants" was included in the Fertilizer Order by Order dated 23.02.2021 of the Ministry, but as the Ministry has clearly expressed that bio-stimulants would exclude plant growth regulators, the definition would certainly provide guidance. 46. Fertilizers and plant growth regulators are both used in agriculture but serve different purposes. Fertilizers are substances added to the soil or plants to provide essential nutrients like nitrogen, phosphorus, and potassium that plants need to grow. They enhance soil fertility and promote plant growth by providing the necessary elements for healthy development. On the other hand, plant growth regulators are chemicals that influence plant growth and development by affecting physiological processe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performance. (ii) Plant growth regulators, on the other hand, influence and control specific physiological processes within plants, such as growth patterns, flowering, fruit development, and response to environmental stimuli. Mode of Action (i) Fertilizers work by supplying nutrients directly to the soil or plants, which are then absorbed by the roots and utilized for various metabolic processes within the plant. (ii) Plant growth regulators function by interacting with plant hormones and signaling pathways, altering gene expression, and ultimately modifying plant growth patterns and responses. Application (i) Fertilizers are applied to ensure a consistent supply of nutrients throughout the growing season. They can be applied before planting, during growth stages, or as a foliar spray. (ii) Plant growth regulators are applied in specific concentrations and at precise timings to elicit desired responses in plants. They are used to manipulate plant growth processes at critical stages of development. Effects (i) Fertilizers enhance overall plant growth, increase crop yield, improve nutrient uptake, and support healthy plant development. (ii) Plant growth regulators ..... X X X X Extracts X X X X X X X X Extracts X X X X
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