TaxTMI 
TaxTMI 
2012 (11) TMI 865
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.... of the assessee's products as 'Plant Growth Regulators' (PGRs) under SH 3808.20 (3808 93 40 under the eight-digit system of classification) of the First Schedule to the Central Excise Tariff Act, 1985. The assessee's claim for classification of the goods as 'Other Fertilizers' under heading 31.05 of the CETA Schedule attracting 'nil' rate of duty was rejected. 2. The learned counsel for the appellant narrated the history of this case which went up to the Supreme Court. When the Commissioner passed orders in adjudication of the first few show-cause notices confirming the demand of duty based on classification of the products under heading 38.08, appeals were filed by the assessee and the same were allowed by this Tribunal holding the goods to be classifiable under heading 31.05 and setting aside the demand of duty. Against the Tribunal's order, the department filed civil appeals before the Supreme Court and the Apex Court by judgment dated 15-5-2008 set aside the Tribunal's order on classification of the goods and remanded the issue to the adjudicating authority for fresh decision. The Apex Court upheld the Tribunal's view on the limitation issue and, consequently, duty could....
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....6 : For the purposes of heading No. 31.05, 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 fertilizing elements nitrogen, phosphorus or potassium." He argued that, for classification under Heading 31.05, the product must be of a kind used as fertilizer and should contain, as an essential constituent, at least one of the fertilizing elements N, P or K. The subject goods were ultimately used as fertilizers and the same contained Nitrogen in the form of nitrates and urea. Hence both the conditions of chapter Note-6 were satisfied in the present case for classification of the goods under Heading 31.05. In this context, it was also submitted that neither the chapter note nor the relevant HSN explanatory notes specified any minimum percentage of Nitrogen in a product for classification under heading 31.05. Hence presence of Nitrogen to the extent of 0.31% was enough to satisfy the requirements of Chapter Note-6 ibid. The learned counsel also relied on certain circulars of C.B.E. & C. viz. No. 26/90 dated 24-5-1990, No. 79/79/94 dated 21-11-1994 and No. 392/25/98 dated 19-5-1998 and also ....
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....ication of the production under heading 31.05 and against the demand of duty. He also pleaded financial hardships on the strength of balance sheet and allied accounts for the year ending 31-3-2011. 3. Learned special consultant for the Revenue also referred to the relevant tariff entries, chapter notes, HSN explanatory notes, etc. in the context of canvassing classification of the goods under heading 38.08. He pointed out that N, P and K were essential fertilizing elements and hence these elements should be present in large amounts in fertilizers. Presence of a minuscule percentage of Nitrogen as in this case would not make the product a fertilizer. As a matter of fact, many of the constituents of the mixture were not fertilizers at all on account of absence of N, P and K. The appellant did not offer any explanation as to why such constituents were also added. According to technical literature, salts of Zinc, Manganese, Iron (Ferrous), Copper, etc. would be used in PGRs. The learned special consultant for the Revenue also referred to Note-1 in Chapter 38 of the CETA Schedule and submitted that PGRs which were not separate chemically defined elements or compounds were not excl....
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....ke it a fertilizer. In this connection, the aforestated scientific study indicates that PGRs are organic compounds, other than nutrients. As compared to nutrients which play a major role in the plant growth as a whole, PGRs play a restrictive role. PGR do not contain N, P or K. In the impugned product(s) manufactured by the assessee, PGR exists. Therefore, the question to be asked is whether presence of mere 0.31% of nitrogen would make the PGR in the impugned product classifiable as "other fertilizers" in CSH 3105.00. In our view, essentially the impugned product is PGR. However, assessee contends that the impugned product(s) is a mixture of various inorganic substances and, therefore, it is for the Adjudicating Authority to go into composition and find out whether 0.31% of nitrogen would convert PGR into nutrient falling under CH 31.05. Whether with addition of 0.31% of nitrogen, the PGR becomes "other fertilizers" in CSH 3105.00 is the question which needs to be examined by the Adjudicating Authority as it is the case of the Department that the assessee has added nitrogen only as a pretence so that the impugned product(S) could be classified as "other fertilizer" under CSH 3105.....
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.... What was rejected by the Commissioner was the recommendation of the committee for classifying the goods as fertilizers. In our view, the findings independently recorded by the adjudicating authority on the classification issue are prima facie correct. In any case, the view expressed by the Apex Court itself that the product is essentially a PRG is clearly going against the appellant. 5. We must also make a mention of the constituents of the products, which are the following : (i) Zinc sulphate (ii) Urea (iii) Calcium Nitrate (iv) Magnesium Sulphate (v) Borax (vi) Manganese Sulphate (vii) Ferrous Sulphate (viii) Copper Sulphate (ix) Potassium Nitrate (x) Boric acid and others It is not in dispute that the products were manufactured by mixing the above chemicals. It is significant to note that the above chemicals, barring urea, potassium nitr....