AI Drafter 
TaxTMI 
TaxTMI 
2018 (7) TMI 985
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....ice dated 20.04.2009 was issued to the appellants proposing to classify these Bio-products as 'Plant Growth Regulators' and falling under CSH 380820, attracting duty. Vide notification No. 2/2008 dated 01.03.2008, the duty is reduced from 16% to 14%. After due process of law, the original authority confirmed the demand of Rs. 30,70,342/- along with interest and imposed equal penalty. In appeal, the Commissioner (Appeals) accepted the classification of the respondent-assessee and set aside the demand. Hence, the Department is now before the Tribunal. 2. The learned AR, Shri R. Subramaniyan, supported the grounds of appeal. He submitted that these Bio-products are used to regulate the growth of plant by way of increasing the soil fertility, controlling the attack of pests and disease. Thus, the products fall under plant growth regulators and are rightly classifiable under 3808934. Up to 01.03.2008, the products attracted duty of 16% and, thereafter, vide notification No. 2/2008, the duty was reduced to 14%. The impugned products are the broth containing cultures of living micro-organisms mixed with talc powder as carrier material. These products are packed in polythene bags and st....
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....& pseudomonas 4. The Commissioner (Appeals) has given details of all these micro- organisms in the impugned order after relying on expert's text books. The discussion made clearly brings out that these micro-organisms are not plant growth regulators. Further, a certificate was given By Dr. K. Hari, Senior Scientist, Micro-Biology of the Sugarcane Breeding Institute (ICAR), Coimbatore wherein an elaborate discussion and the list of micro- organisms used for field application to agricultural crops for maintaining the health of the crops, in particular, at the root zone, is given. The Assistant Director of Agriculture, Quality Control, Erode, has specified that these micro-organisms only increase the soil microbial activities and that they do not contain any chemical fertilizers. He submitted that the very same issue was analysed by the Tribunal in the case of T. Stanes and Co. (supra) wherein the Tribunal held that the impugned goods would fall under Heading 3002. 5. Heard both sides. 6. The issue to be considered is whether these micro-organisms fall under classification 3808, as contended by the Department, or would fall under 3002, as claimed by the respondents. It is per....
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.... The ld. Counsel for Stanes submitted that initial SCN had proposed classification of the microbes under CH 3808 as insecticide. HSN Explanatory notes under CH 3808 excluded cultures of micro-organisms used as a basis for rodenticide etc. from that chapter under clause (a)(v) of the note. Those cultures of micro-organisms fell under CH 3002. Microbes were micro-organisms and not preparations based on cultures of micro- organisms. They were removed on carriers such as tapioca powder and oats. The Commissioner (A) had found in his Order in Appeal No. 40/05 dated 28-2-05 that the moot point to be determined was whether the products were aids to plant growth classifiable under CH 3002. This being a deep biological question, the Commissioner (A) had remanded the question to original authority for making enquiries. No other question survived. These organisms were applied at the base of the plant or on the leaves. They consumed and exhausted the nutrients in the neighbourhood so that other undesirable bacteria/fungi were deprived of any life sustaining material and perished. This was a prophylactic operation. Disease was prevented by annihilating harmful bacteria by starving them of nutri....
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....chemicals and did not kill pests. He dropped the proposal to classify the microbes as insecticides of CSH 3808 10. On appeal by the department against the above order, in the impugned orders, Commissioner (A) decided that the products were insecticides of CSH 3808 10. He found that CH 3808 for pesticides, fungicides etc. specifically covered the microbes in question. He found that CH 3808 for pesticides, fungicides etc. specifically covered the microbes in question and the Additional Commissioner had gone astray in his search when he had found that microbes were not conventional pesticides. 10.1 We find that in passing the impugned orders, the Commissioner (A) has not travelled beyond the confines of the SCN. We note that the website of Stanes explains the use and function of microbes as fungicides or insecticides as found by the Commissioner (A). However this finding is the outcome of investigation not envisaged in the remand order and hence not sustainable. Commissioner (A) rightly found that the original authority had ruled out classification of microbes under CH 3808 on wrong grounds that they were not chemicals and did not directly kill pests. 10.2 There is n....