Case Law Details

Case Name : Biostadt India Ltd Unit II Vs Commissioner of C.E. & S.T. (CESTAT Chandigarh)
Appeal Number : Excise Appeal No. 61417 of 2018
Date of Judgement/Order : 04/01/2022
Related Assessment Year :

Biostadt India Ltd Unit II Vs Commissioner of C.E. & S.T. (CESTAT Chandigarh)

We find that appellant is clearing Biozyme in the packages of less than 10 litres or more than 10 litre cleared under chapter heading 31051000 was accepted by the department. With regard to the goods which are less than 10 litres, the Revenue wants to classify under chapter 31051000 of chapter heading of the tariff which described he goods should be in tablet form or similar form or packages or packages goods weight not exceeding 10 kgs. Therefore, intent of the said entry is clear that the goods should be in solid form i.e. in the form of tablet or powder and not in weight.

WE have gone through the dictionary meaning of kilogram and kilometer as per dictionary unit of mass equal to 1000 gms for 1 litre unit of volume of liquid or gas. Further, in Oxford dictionary the word is defined which means unit of mass is volume.

Admittedly, kilogram and kilo litre have defined in kilo it should be sold in the form of kilo – it should be in liquid form under chapter 3101000 of the tariff talks about the tablet or similar form of packages less than 10 kgs. If we take the of nocitur a sociis, which means one or more they are un, therefore, it is clear that chapter heading covers 3105 the goods in sold forms and not in liquid form and for the goods 10 litre the classification has been admitted by the Revenue under tariff heading 310510099 of tariff Act.

In that circumstance, we hold that the classification of the product under chaper 31051000 of the Act is not applicable and the product is correctly classifiable under chapter 310510099 of the tariff.

FULL TEXT OF THE CESTAT CHANDIGARH ORDER

The appellant is in appeal against the impugned order wherein the demand of duty has been confirmed disputing classification adopted by the appellant for the period 1.6.2013 to 30.4.2016 wherein various show cause notices have been issued to the appellant for the said period.

2. The facts of the case are that the appellant is engaged in the manufacture of Animal or Vegetable Fertilizers falling under chapter 31 of the Central Excise Tariff Act, 1985 and cleared under the brand name “Biozyme” claiming nil rate of Central Excise classifying under sub-heading 31010099 of the Tariff Act. The finished goods so manufactured in liquid form is packed in HDPE bottles of sixes of 100 ml, 250 ml, 500 ml, 1 litre and 5 litre and in few cases in barrels/drums of 200 litres classifying under tariff entry 31010099 at nil rate of duty. The Revenue is of the view that “Biozyme” cleared and manufactured by the appellant in unit packs of 100 ml, 250 ml, 500 ml, one litre and 5 litre is classifiable under tariff entry 31051000 and not under tariff entry 31010099. Consequently, 3 show cause notices were issued to the appellant for the period June, 2012 to April, 2016 and the same are adjudicated by the adjudicating authority holding that the product packed in 100 ml, 250 ml, 500 ml, one litre and5 litre is classifiable under tariff entry 31051000. They have also relied upon the Rule 7 of Central Excise Valuation Rules, 2000 and proposed the demand by taking the assessable value to be 70% of the MRP as the price charged by the depots of the appellant from their dealer/stockiest were in similar range. It was held that the appellant suppressed the fact from the department of clearance of Biozyme in packs of gross weight of less than 10 kg with the intention to evade payment of duty. The said order was challenged before the Commissioner (Appeals), who dismissed the appeal filed by the appellant. Against the said order, the appellant is before us.

3. Ld. Counsel for the appellant submits that the expression bore in this chapter is in tablets of similar forms or packages of gross weight not exceeding 10 kg of chapter 3105 does not cover chapter 3101 as chapter heading 3102 to 3104 provided that they are not put up in the forms or packages described in heading 3105. The chapter heading 3105 is excluded. Therefore, he further submits heading 3105 refers to in sold form and liquid form as goods are in tablet form in packages less than 10 kgs. Therefore, by applying the noscitur a socii, the entire phrase goods of this chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg is required to mean goods which are in sold forms only will be covered under this chapter heading and not the goods which are in liquid form.

4. He also relied on the decision of this Tribunal in the case of Madura Coats Pvt.Ltd.-2017 (12) ELT TMI 1268-CESTAT-Chennai and in the case of Pardeep Aggarbatti vs. State of Punjab-1997 (10) TMI 338 (SC).

5. It is his submission that that meaning that meaning of unclear words or phrases is to be ascertained from the accompanying words. Since Biozyme was always manufactured and cleared in liquid state, therefore, applying the principle of nocitur a sociis, the words similar forms‟ or packages of gross weight not exceeding 10 kg shall not include Biozyme in liquid.

6. He also disputed the quantification of demand and also submits that the extended period of limitation is not invokable in this case. Consequently, no penalty is imposable on the appellant.

7. On the other hand, ld.AR opposed the contention of the ld.Counsel for the appellant and submits that with effect from 28.2.2005, six digits classification code was change to eight digit classification code and the first and the second Schedule of the Tariff Act were substituted. On comparison of wording of heading 3101.00 of the Tariff Act before amendment vis-à-vis after amendment, it appears that the description of new tariff entry, sub-headings for guano, animal dung, animal excreta and others have been inserted.

8. A perusal of entries relating to tariff entry 3105 reveals that its wording has been changed, inasmuch as, the words goods of this chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg‟ have been inserted. Upon insertion of these underlines words, the wording of Chapter Notes 31 has also been changed, inasmuch as, chapter Note 2 which earlier read Heading 3102 applies only to the following goods‟ now reads Heading 3102 applies only to the following goods, provided that they are not put up in the form of packages described in the form of packages described in heading 3105‟. Similarly, chapter Notes of heading 3103 and 3004 have also been changed so as to exclude the products put up in the form of packages mentioned in heading 3105. Therefore, it appears that prior to 28.2.2005, the goods namely animal or vegetable fertilizers were appropriately classifiable under sub heading 3101. However, subsequent to change in the Tariff Act, w.e.f.28.2.2005, heading 3105 read as Mineral or chemical fertilizers containing two or three or the fertilizers elements, nitrogen, phosphorous and potassium; other fertilizers; goods of this chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg.‟

Therefore, with the insertion of underlined words, the scope of tariff heading 3105 appears to have been enlarged so as to cover the goods of Chapter 31 when packed in packages of gross weight not exceeding 10kg. Therefore, it appears that the subsequent to amendment in the Tariff Act w.e.f.28.2.2005, the classification of “Biozyme”, if packed in packages of weight upto 10 kg would be changed from sub-heading 31010099 to 31051000. This observation also finds supports from HSN Notes to Chapter 31 where in the Explanatory Note under heading 3105 reads as “The heading also covers the goods of this chapter if put in tablets or similar forms or in packages of a gross weight not exceeding 10 kg.”

9. He further submits that any goods of chapter 31 which are cleared in packages of weight of 10 kgs would be classifiable under sub-heading 31051000. It is his submission that that although the goods were sold in liquid form but when weighed would be weight well below 10 kg. He also submits that Rule 3(a) of the General Rules for the Interpretation of this Schedule also provides that the heading which provides the most specific description shall be preferred to the heading providing a more general description. He supported the impugned order and filed written submissions also.

10. On going through the written submissions and argument advanced before us, we find that the fact remains that the appellant is clearing Biozyme in the packages of less than 10 litres or more than 10 litre cleared under chapter heading 31051000 was accepted by the department. With regard to the goods which are less than 10 litres, the Revenue wants to classify under chapter 31051000 of chapter heading of the tariff which described he goods should be in tablet form or similar form or packages or packages goods weight not exceeding 10 kgs. Therefore, intent of the said entry is clear that the goods should be in solid form i.e. in the form of tablet or powder and not in weight. W have gone through the dictionary meaning of kilogram and kilometer as per dictionary unit of mass equal to 1000 gms for 1 litre unit of volume of liquid or gas. Further, in Oxford dictionary the word is defined which means unit of mass is volume. Admittedly, kilogram and kilo litre have defined in kilo it should be sold in the form of kilo – it should be in liquid form under chapter 3101000 of the tariff talks about the tablet or similar form of packages less than 10 kgs. If we take the of nocitur a sociis, which means one or more they are un, therefore, it is clear that chapter heading covers 3105 the goods in sold forms and not in liquid form and for the goods 10 litre the classification has been admitted by the Revenue under tariff heading 310510099 of tariff Act. In that circumstance, we hold that the classification of the product under chaper 31051000 of the Act is not applicable and the product is correctly classifiable under chapter 310510099 of the tariff.

11. We have also gone through the Rule 12 of the Legal Metrology (Packaged Commodities) Rules, 2011 and which are reproduced as under:-

“12. Manner in which declaration of quantity shall be.— (1) The declaration of quantity shall be expressed in terms of such unit of weight, measure or number or a combination of weight, measure or number as would give an accurate and adequate information to the consumer with regard to the quantity of the commodity contained in the package.

(2) Except in the cases of commodities specified in the Fourth Schedule, the declaration of quantity shall be in terms of the unit of – (a) mass, if the commodity is solid, semi-solid, viscous or a mixture of solid and liquid;

(b) length, if the commodity is sold by linear measure;

(c) area, if the commodity is sold by area measure;

(d) volume, if the commodity is liquid or is sold by cubic measure; or

(e) number, if the commodity is sold by number”

12. On going through the above rule, we find that means, if the commodity is sold, semi-sold, viscous or a mixture of sold and liquid and volume means, if the commodity is liquid or is sold by cubic measure. Admittedly, in this case, the goods have been sold by the appellant in kilo litre. Therefore, as per Legal Metrology (Packaged Commodities) Rules, 2011, the goods are appropriately classifiable under chapter310510099 of the Tariff Act.

13. In view of this, we set aside the impugned order and allow the appeal with consequential relief, if any, to the appellant.

(pronounced and dictated in court)

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