2022 (6) TMI 592 - AT - Customs

Tribunal remands case for reclassification of imported product, resolving dispute

The Tribunal set aside the original authority's classification of the imported product as 'plant growth regulators' and 'chemical products not elsewhere ... Classification of goods - composition of the imported yaravita zintrac (zinc oxide suspension concentrate) - classifiable under tariff item 3105 9090 of the First Schedule to Customs Tariff Act, 1975 or not - HELD THAT:- The appellant had imported the impugned goods with necessary permissions under the Fertilizer (Control) Order, 1985; the goods are, in essence, fertilizers and there is no reason, except in extraordinary circumstances of non-fitment within any of the headings therein, to seek an alternative classification. The schema of chapter 31 of First Schedule to Customs Tariff Act, 1975 is critical to this; there are two principal types: fertilizers of animal or plant origin and mineral and chemical fertilizers. Taking into account the essentiality of ‘macronutrients, the latter, constituting the bulk of the headings, are grouped again as nitrogenous, phosphatic and potassic corresponding to the trio: nitrogen, phosphorus and potassium as well as in all the permutations and combinations of the three. The classification adopted by the original authority, and impugned before the first appellate authority, has its roots in the quantum of ‘nitrogen’ without ascertainment of conformity with ‘products of a kind used as fertilisers’ in note 6 of chapter 31 of First Schedule to Customs Tariff Act, 1975 with its emphasis on use before dovetailing it with the proposition of Learned Authorized Representative supra of the essentiality of ‘nitrogen’ to the imported product. The jettisoning of the permission for import by the competent authority makes that deficiency in the order of the original authority obvious. With the impugned order departing from the framework of appellate resolution, the merging of the order of the original authority within it is not a proposition that is tenable; setting aside the order of the first appellate authority may not, of itself, impact the order of the original authority. Our appellate competence is limited to the propriety and legality of the order impugned before us which, in the peculiar circumstance of the decision of the first appellate authority, does not encompass the order of the original authority within it. As the two appeals, thus far, have been of the appellant herein, it would hardly do for the appellant to be placed in this tenuous position. A finality to the dispute is called for. The appeal of the importer before the first appellate authority is restored for a fresh decision on the correctness of the order of the original authority - Appeal disposed off by way of remand. Issues:Classification of imported 'yaravita zintrac' as 'other fertilizer' or 'plant growth regulator' or 'chemical products not elsewhere defined'Analysis:1. Classification Dispute: The appeal involves a dispute regarding the classification of the imported product 'yaravita zintrac.' The appellant declared it as 'other fertilizer' in the bill of entry, but the assessing officer reported it to contain nitrogen as a fertilizing agent and zinc as a micronutrient, leading to a need for alternative classification.2. Original Authority's Decision: The original authority discarded the claim for classification as 'other fertilizer' due to the high presence of zinc, suggesting classification as 'plant growth regulators.' The first appellate authority classified the goods as 'chemical products not elsewhere defined.'3. Appellant's Contentions: The appellant argued that the rejection of declared classification was based on the insignificance of nitrogen, citing relevant legal precedents. They also challenged the jurisdiction of the first appellate authority to alter the classification at the appeal stage without proper notice.4. Legal Framework: The appellant referred to Chapter 31 of the Customs Tariff Act, emphasizing the presence of fertilizing elements for classification as fertilizer. They highlighted the coverage under the Fertilizer (Control) Order, 1985, and argued that the goods should be classified as fertilizer.5. Tribunal's Framework: The Tribunal's decision in Commissioner of Central Excise Mumbai v. Aries Agro –Vet Industries Ltd provided a framework for resolving the dispute, emphasizing the intended use of micronutrients and macronutrients for agriculture.6. Explanatory Notes: The Authorized Representative argued that micronutrient preparations should be classified elsewhere based on the Explanatory Notes of the Harmonized System of Nomenclature. They disputed the appellant's claim regarding the essentiality of nitrogen in the product.7. Legal Principles: The decisions of the Supreme Court outlined the fundamental framework for resolving classification disputes, emphasizing the onus on tax authorities to find fitment within the relevant description.8. Appellant's Import: The appellant had necessary permissions under the Fertilizer (Control) Order, 1985, indicating that the goods were fertilizers. The classification dispute revolved around the appropriateness of tariff item 3105.9. Essentiality of Nutrients: The distinction between macronutrients and micronutrients was discussed, emphasizing the critical role of nitrogen, phosphorus, and potassium in agriculture.10. Judicial Review: The classification adopted by the original authority was challenged for not considering the essentiality of nitrogen in line with the Customs Tariff Act.11. Judgment: The Tribunal set aside the impugned order for exceeding jurisdiction and remanded the appeal to the first appellate authority for a fresh decision based on the correctness of the original authority's order. The appeal was disposed of by remand, ensuring a final resolution to the dispute.