2018 (11) TMI 101 - AT - Customs

Tribunal upholds plant extract classification over bio fertilizers, imposes redemption fine.

M/s. Hindustan Pulverising Mills, Shri Nikhil Aggarwal, Director, Marketing Versus Commissioner of Customs (Imports) (Vice-Versa)

The Tribunal upheld the classification of the imported goods as 'plant extract' under CTH 13021990, rejecting the appellants' claim that they were bio ... Classification of imported goods - plant extracts (bio fertilizer) - Whether the impugned goods are ‘plant extract’ classifiable Under CTH 13021990 or as ‘bio fertilizer’ under CTH31010099? - Held that:- The impugned product cannot be grouped under Chapter 31 due to the genesis of the product and characteristics. Moreover, the National and Regional Centre for Organic Farming have given a categorical report that the subject goods do not conform to any of the requirements of any biofertilizers listed under FCO. Therefore, the impugned products are not biofertilizers - the Commissioner has correctly held that when there is a legal definition available on the subject defining an item, no other definition can be adopted in this regard to the same. The appellants themselves have mentioned the product to have been extracted from different plants grown in China. This being the case, one should have no hesitation or doubt in categorizing the impugned product as ‘Extracts’ - As it is not denied that the impugned product is an extract of plants, it is correct to classify the same under Chapter 13 of CTH. Moreover, as the goods were certified not to be biofertilizers, the classification claimed by the appellants under Chapter 31 is squarely excluded. The impugned product is classifiable under CTH 13021990. Extended period of limitation - Held that:- Having assessed that Bill of Entry provisionally, it was open to the department to keep an alert in the system to interdict subsequent Bills of Entry. Having failed to do so, department cannot allege suppression on the part of the importer. Therefore, the demand needs to be restricted to the normal period. Whether the Ld. Commissioner erred in not imposing fine in lieu of confiscation and penalty? - Held that:- The goods in respect of Bill of Entry 740088 dt.6.1.2009 were seized and were provisionally released and therefore, in view of the Hon’ble Supreme Court’s decision in the case of Weston Components Ltd. vs. CC [2000 (1) TMI 45 - SUPREME COURT OF INDIA], the adjudicating authority should have imposed redemption fine. Appeal allowed in part. Issues Involved:1. Classification of imported goods as 'plant extract' under CTH 13021990 or as 'bio fertilizer' under CTH 31010099.2. Imposition of fine in lieu of confiscation and penalty.Issue-wise Detailed Analysis:1. Classification of Imported Goods:- The appellants, M/s. Hindustan Pulverising Mills, classified their imported goods as bio fertilizers under CTH 3101 0099. However, the Regional Centre for Organic Farming, Nagpur, and the National Centre for Organic Farming, Ghaziabad, reported that the samples did not meet the requirements of bio fertilizers as per the Fertilizer Control Order (FCO) 1985.- The Commissioner of Customs reclassified the goods under CTH 1302 1990 as 'plant extract' and demanded differential duty of Rs. 72,37,601/-. The appellants argued that the product should be classified under CTH 3101 0099, asserting that it is a plant-based fertilizer supplying nutrients to the crops.- The appellants provided opinions from experts and test reports from Shriram Institute for Industrial Research, stating that the product is a liquid organic fertilizer. They argued that the product is an end product used as a fertilizer and not a raw material, thereby not fitting under CTH 1302.- The Tribunal examined the definitions and explanatory notes of relevant chapters. It noted that Chapter 13 covers plant extracts used as raw materials, while Chapter 31 covers fertilizers providing nutrients for overall plant growth.- The Tribunal concluded that the impugned product could not be classified under Chapter 31 due to its genesis and characteristics. The product was deemed a plant extract and correctly classified under CTH 13021990, as it did not meet the criteria for bio fertilizers under FCO.2. Imposition of Fine and Penalty:- The Department appealed against the Commissioner’s decision to drop other charges, not confirm duty on already cleared goods, and not impose penalties.- The Tribunal found that the appellants filed multiple Bills of Entry, with some provisionally assessed. The Department argued that the appellants misled the classification to evade duty, invoking the extended period for demand.- The Tribunal noted that the Department was aware of the product and had provisionally assessed one of the Bills of Entry, thus failing to establish suppression by the appellants. Consequently, the demand was restricted to the normal period, upholding the differential duty demand for Bills of Entry filed on or after 21.07.2008.- The Tribunal agreed with the Department that redemption fine should be imposed on the provisionally released goods, in line with the Supreme Court decision in Weston Components Ltd. vs. CC.Judgment:- The demand for differential duty was restricted to the normal period, excluding the extended period due to lack of suppression by the appellants.- The classification of the product under CTH 13021990 as 'plant extract' was upheld.- A redemption fine of Rs. 1,00,000/- was imposed on the goods imported under Bill of Entry No. 740088 dated 06.01.2009.- Both appeals were partially allowed, with the order pronounced in open Court on 12.10.2018.