Brief of the Case
In the case of M/s. Sree Ramcides Chemicals Pvt. Ltd. Vs. CCE & ST, Tiruchirapalli, it was held that for the purpose of classification of fertilisers, it is important to see where the products consists of nitrogen phosphorous and potassium as laid down in the explanatory notes, it should be classified as “fertilizers”.
Brief Facts
The brief facts of the case are that the appellant manufacture pesticides and plant growth materials and bio-fertilizers. The appellants in appeals No. E/510/10 and No. E/208/2010 are manufacturing Allwin Top powder, Allwin Wonder powder, Allwin gold 15 G Granules, Allwin XL granules, Rhino powder, Allwin gold-Liquid, Allwin XL-Liquid, Agrowet, Rishab-Liquid and Rock and classified them under CETSH 3101 0099 treating them as Animal/Vegetable fertilizers (or) bio-fertilizers. The department issued SCNs proposing to classify them under CETSH 3824 9090.
The Commissioner Central Excise confirmed the demand of Rs.1,63,92,339/- and also imposed equal penalty in his OIO No. 7/2010 dated 14.07.2010 in appeal E/508/10. For the subsequent period also he confirmed Rs.2,37,65,131/- and imposed a penalty of Rs. 25,00,000/- under Rule 25 of the Central Excise Rules, 2002, vide his order No. 1/2011 dated 27.01.2011 in appeal No. E/208/2011.
Contentions of the Assessee
The assessee submitted that the products manufactured by the appellant are classifiable as other fertilizers under chapter heading 3105 as all the items contain nitrogen, phosphorous and potassium or together. The adjudicating authority has not disputed the contents of the goods but only rejected the classification under CETH 3105 purely based on the reasoning that their goods are not covered under Fertilizers Control Order, 1995 (FCO). The Board’s Circular dated 24.05.1990, another Circular dated 21/11/1994 and Circular dated 19.05.1998. The assessee drew attention to chapter note 2 to chapter 61 and HSN explanatory note 6 and submits that as per note 6 for the purpose of heading 3105, the term other fertilizers applies only to products of a kind used as fertilizers and containing as an essential constituent, at least one of the element is nitrogen phosphorous or potassium.
Further it is submitted that these goods are not classifiable under 3824 and drew attention to the Explanatory Note sl.No. 47 and submitted that in order to classify the goods as plant growth regulators, the goods should be consisting of products classifiable under chapter 25 i.e. they are sand and clay, whether or not they contain small quantity of fertilizing elements nitrogen, phosphorous and potassium. Heading 3824 which relates to chemical products and preparations, not elsewhere specified or included in their case the products are not chemically defined products but are mixtures and they did not contain any soil or clay as media. It is only foliar spray applied on the plant. The assessee also drew attention to FCO and as per the definition, fertilizers means any specific use or intended to be used as fertilizer on the soil or rock and includes mix of fertilizer, bio-fertilizers and organic fertilizers. Therefore, these products are rightly classifiable under 3105 as they are other fertilizers as classified by Board’s Circular read with chapter note6.
Contentions of the Revenue
The revenue reiterated the findings of the OIO and SCN. As per FCO the definition of fertilizer means any substance used or intended to be used as a fertilizer of the soil and/or crop and specified in Part A or Schedule I and includes a mixture of fertiliser, the appellant’s products are not figuring in the schedule. Therefore, adjudicating authority has rightly held that these are not fertilizers as per FCO. The revenue relied on the Tribunal’s decision in the case of Himgiri Metals Pvt. Ltd. – 2014 (308) ELT 735 (Tri.-Del.) and in the case of CCE, Bangalore Vs. Karnataka Agro Chemicals – 2008 (227) ELT12 (S.C.). The revenue submitted that test report does not show that the goods are fertilizers. Whereas, she also submitted that in none of their packets, the appellants mentioned that they are fertilizers. The Revenue further drew attention to the order of the Hon’ble Supreme Court in the case of Karnataka Agro Chemicals (supra), wherein the Hon’ble Supreme Court remanded the case to the adjudicating authority to determine whether the presence of nitrogen to classify as fertilizer and pleaded for remand of the case to the adjudicating authority. Therefore, the adjudicating authority rightly classified the products as plant growth regulators under 3824. Dosth has been correctly classified under 3402 and in this regard she submits that the main pack Allwin wonder plus does not mentioned that Dosth is kept as free inside it. Therefore, they have not declared this Dosth as a combi-pack.
Held by Hon’ble CESTAT
The Hon’ble CESTAT stated that as plant growth regulators and rejected the classification under 31.05 purely on the ground that these products are not figuring under schedule to FCO, 1995. This was the sole ground for rejecting classification under Chapter 31. There is no dispute on the facts relating to the description of the contents, chemical composition etc., which has been admitted by the adjudicating authority as these goods are not mixtures and chemically defined. Having the department accepted the appellant’s plea that these are only mixtures but choose to classify them under 3824 as plant growth regulators. In this regard it is pertinent to see the chapter note 6 of chapter 31 and the corresponding HSN explanatory note to chapter 31.
HSN explanatory note and Chapter note 6 of chapter 31 is identically worded similar to chapter note 6 of chapter 31. It is seen from the above, in order to classify the goods under 3105 as other fertilizers, two condition are stipulated under chapter note the conditions to be satisfied i.e.
