2017 (9) TMI 876 - AT - Central Excise

Classification of ABDA as 'Other Fertilizer' upheld; Concessional rate denied; Time-barred demands; Education cess liability dismissed

EID Parry (India) Ltd. Versus CCE & ST, LTU Chennai And Vice-Versa

EID Parry (India) Ltd. Versus CCE & ST, LTU Chennai And Vice-Versa - 2018 (10) G. S. T. L. 490 (Tri. - Chennai) Issues Involved:1. Correct classification of the product ABDA.2. Dutiability of ABDA when cleared from EOU to DTA.3. Applicability of limitation and liability to penalty.4. Eligibility for concessional rate under Notification No. 23/2003-CE.5. Liability to additional Education Cess.Issue-wise Detailed Analysis:1. Correct Classification of the Product ABDA:The appellant-assessee classified ABDA under Central Excise Tariff Heading 3101.00.99 as 'Animal or Vegetable Fertilizers.' The Revenue objected, seeking reclassification under Chapter 38 as 'Miscellaneous Chemical Products,' specifically as 'Plant Growth Regulators' under CETH 38089340. The Tribunal found that ABDA contains Nitrogen, Phosphorous, and Potassium, making it more akin to a fertilizer. The Tribunal referenced Northern Minerals Ltd. vs. CCE New Delhi, concluding that plant growth promoters like ABDA should not be classified as plant growth regulators. Consequently, ABDA was correctly classified under Heading 31010099 as 'Other Animal or Vegetable Fertilizer.'2. Dutiability of ABDA When Cleared from EOU to DTA:The Tribunal examined the eligibility of ABDA for concessional rates when cleared to DTA under Notification No. 23/2003-CE. The exemption was denied because the appellant used imported paraffin wax, violating condition No. 3(i) of the notification, which requires goods to be produced or manufactured wholly from raw materials produced or manufactured in India. The Tribunal determined that paraffin wax used in the manufacturing process was a raw material, not a consumable, thus disqualifying the appellant from the exemption.3. Applicability of Limitation and Liability to Penalty:The Tribunal addressed whether the demands invoking the extended period were barred by limitation. The appellant had informed the department on 1.8.2005 about the composition and classification of ABDA. The Tribunal noted that the department did not act on this information until November 2006. Given the appellant's transparency and the technical nature of the classification dispute, the Tribunal found no justification for invoking the extended period for demand and penalties, agreeing with the appellant's submission on limitation.4. Eligibility for Concessional Rate Under Notification No. 23/2003-CE:The Tribunal upheld the denial of the concessional rate under Notification No. 23/2003-CE due to the use of imported paraffin wax. The Tribunal clarified that paraffin wax was a raw material in the manufacturing process, not merely a consumable, thus violating the notification's condition requiring the use of domestically produced raw materials.5. Liability to Additional Education Cess:The Tribunal addressed the calculation of the correct amount of cess payable on goods cleared to DTA. The original authority had ruled that once education cess is added to customs duty, it should not be charged again. The Tribunal referenced the Supreme Court's affirmation in Meghmani Dyes and Intermediates Ltd., concluding that the appellant's additional liability for education cess was not sustainable.Conclusion:The Tribunal held that ABDA is correctly classifiable under Heading 31010099. The appellant is not eligible for the exemption under Notification No. 23/2003-CE due to the use of imported paraffin wax. The demand for differential duty, if any, is applicable only for the normal period, and the additional liability for education cess is not sustainable. The appeals by both the appellant-assessee and the Revenue were disposed of accordingly.