TaxTMI 
TaxTMI 
2020 (2) TMI 1025
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....ents of the Hon'ble Tribunal and taken in keeping with the circulars issued by the Board. (C) Pending admission, final hearing and disposal of this petition, this Hon'ble Court be pleased to stay the execution, operation and implementation of the impugned order No. 7172/ 2018 dated 29th October 2018 passed by the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad as per Annexure-P to this petition. (D) Any other further relief as may be deemed fit in the facts and circumstances of the case please be granted; Thus, what is essentially under challenge in this petition is the interim order No.7172/ 2018 dated 29th October 2018 passed by the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad. 2. Facts in brief, as could be culled-out from the memo of the petition, deserve to be set out as under: 2.1 The petitioner no.1 is a company registered under the Companies Act, 1956 inter alia engaged in manufacture of agrochemical products falling under Chapter 38 of the Central Excise Tariff Act, 1985. The petitioner no.1 has been importing the product viz; Siapton 10L since May 2003 under Chapter Sub Heading 31010099 as fertilizer. After bri....
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....nt of duty and also giving effect of removal of the said product in the monthly returns for the period involved. The monthly returns were accepted by the jurisdictional Central Excise office without any objection. This issue in the context of classification of the product as a fertilizer has been an issue of dispute between the Assessee and the Department. 2.6 The petitioners contended that while conducting the audit in the year 2008, the audit party took objection regarding classification of the product on the basis of the leaflet/label of the product and without any substantive material and base, it has been contended that the product, in question, is Plant Growth Regulator and falling under Chapter heading 3808. The objection was communicated by the Range office vide letter dated 29th July 2008. The compliance was also furnished by the petitioner vide letter dated 1st September 2008. 2.7 It is further contended in the petition that the department did not accept the compliance and other documents including orders of the Commissioner of Customs (A), MumbaiIII and the Deputy Commissioner, Ankleshwar and started to issue periodical Show Cause Notices proposing to demand duty u....
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....ing aggrieved with the OIO no.65 to 69/Commr./SuratII/ 2012 dated 10102012 and OIO No.SUREXCUS002COM062 to 0641314 dated 10012014 passed by the Commissioner of Central Excise, the petitioner preferred the appeal before the Customs Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad under Section 35B of the Central Excise Act, 1994. 2.9 The petitioner contended that there is no dispute that the basic ingredients contained in the import are amino acids and peptides. The test result specifically pointsout that the active ingredient contained in the import of goods is nitrogen. It was pointedout that the same product is imported all over the world and in all countries, the same is assessed, registered and used as fertilizer. It was further pointed-out that in this case, the product in question was having amino acids nutrients and the said product was classified as fertilizer under Chapter31 and not the Plant Growth Regulator under Chapter38. A Misc. Application was also filed before the Hon'ble Tribunal to demonstrate how the present product clearly satisfies the circulars. Perusal of the said circular would demonstrate that both the circular required that the product in....
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....bunal to reopen the issue concluded by the Apex Court. 5. It is submitted that it is in quite dispute that the active ingredient in case of Northern Minerals and in the present case, produce i.e. amino acids and peptides are same. However, considering the said aspect the Apex Court confirmed the view that the product having amino acids as a primary material must be considered and classified as fertilizer as held by the Apex Court. It is further submitted that when the Apex Court held that the product having amino acids as a primary material must be considered and classified as fertilizer, how the tribunal arrived at conclusion that a product of some of the assessee containing the same active ingredient should not be considered as a fertilizer and therefore, the order of the tribunal is exfacie and without jurisdiction. 6. It is submitted that merely because the latter bench has some disagreement with one or two of such aspects, it could not be the reason to refer the issue to a larger bench. It is further submitted that in the tribunal's order in case of Northern Minerals, it is held that "amino acids only promote plant growth by providing nutritional support." Further in....
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....uct must be classified as fertilizer." 8. Learned counsel for the petitioners submitted that the issue sought to be referred to the larger Bench has no relevance to the base laid down by the circulars. It is submitted that such circulars are issued for the purpose of uniformity and for avoidance of litigations. Therefore, referring such issue to the larger Bench when the circulars in question require completely different inquiry to be made. 9. Learned counsel for the petitioners submitted that amino acids are known-source of nitrogen. Substantial proof in this regard was placed by the assessee on record. It is further submitted that referring the issue to a larger Bench is clearly without jurisdiction and contrary to the circulars themselves. 10. Learned counsel for the petitioners placed on record the written submissions, which in verbatim reads as under : "1. The issue involved in the present case stands settled by a direct decision of the Hon'ble Tribunal in the case of Northern Minerals Limited V/s. Commissioner of Central Excise, New Delhi reported in 2001 (31) E.L.T. 355 (Page247). 2. The Hon'ble Supreme Court of India has dismissed on merit....
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....lly stating that no plant growth regulators are detected in the product (page274). At page276, the test report shows that the product is primarily nitrogen and amino acids. 8. The only activity carried out by the appellants is that to import their product SIAPTON10L and only after diluting it, the same is repacked and sold. This fact is not disputed. 9. For the purpose of customs, when the product is imported, the same is held to be a fertilizer falling under Chapter31010099 (Order of the Commissioner Appeals page34). The assessments have also been accordingly finalized (page36). However, for some strange reasons, the very same product after a mere dilution is now sought to be classified under Tariff 38089390 as a plant growth regulator instead of plant growth promoters. 10. The testing heads are 31010099 (page26) and 38089390 (page31). It was argued that as the matter is completely covered by a judgment of the Hon'ble Supreme Court of India and the circular of the Board, there can be no question of taking any other view of the matter. To the surprise of the appellants, despite the fact that the Hon'ble Supreme Court has accepted the judgment and ....
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....e appellant in that case was making two kinds of products; one was only by repacking after dilution exactly like the present case and the second was by making granular and spraying actual ingredient on top. 14. The issue in the context of repacking into similar pack is conclusively settled in one paragraph, in para7.1, wherein it is held that if the appellants imported a material which is classified of import under Chapter3101.00 and only repacks he same, then the said activity is not a manufacturing activity as no new product comes into existence and hence, no duty can be charged at all. The present case is exactly the same and stands conclusively covered by para7.1 itself. 15. Even apart from the aforesaid, on a detailed consideration of the issue, in para7.3, on referring to technical literature, holds that "in the instant case, the Department has no case that DHANZYME could inhibit or otherwise modify plant growth the appellant's plea that the product contains only amino acids and other nutrients and, therefore, only promotes plant growth has not been successfully dislodged in the Commissioner's order." In para7.4, reference was made to other decisions....
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....h Court should be kept in mind in view and utmost regard should be paid by the Adjudicating Authorities and the appellate authorities to the requirement of judicial favour and the need for giving effect to the orders of the higher appellate authorities which are binding on them." The observations of the Hon'ble Supreme Court in AIR 1985 SC 330 Page335 is also very apposed. Hon'ble Supreme Court held that it is impossible for the higher Court to give a judgment which satisfies all concern nonetheless, it is imperative that such judgments and observations be reasonably followed. 20. Apart from the aforesaid, even a binding circular has not been considered. This is also a jurisdictional error. 21. A preliminary issue was raised by the respondent in the context of maintainability of the writ petition as the main issue one on classifications. It is submitted that the appeal provided under a Statute is a far lower pedestal then the powers under Article 226 of the Constitution. It can hardly be argued that by way of a statutory appeal, the very power under the constitution is taken away. It is due to this that the Hon'ble High Court exercised its power only i....
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.... affidavitinreply wherein the respondents have taken details contention on both the counts viz. resisting the petition on account of the order impugned in this petition being interim order only referring the matter to the Larger Bench and the fact that the writ petition on the subject matter would not be permissible. The detail contentions were extensively referred to by the learned counsel for the respondents, which could be summarized as under :13. Learned counsel for the respondents submitted that no fundamental or legal rights of the present petitioner have been violated because of any action or inaction on the part of the present respondent, so as to call for interference by this Hon'ble Court and on this ground alone the present petition is not maintainable in law and the same deserves to be dismissed in limine. 14. Learned counsel for the respondents submitted that M/s. Isagro (Asia) Agrochemicals Pvt. Ltd., (petitioner) are holding Central Excise Registration No.AAACI8431LXM001 for manufacture of excisable goods falling under Chapter 28, 29, 31 and 38 of the Schedule of the Central Excise Tariff Act, 1985. 15. He further submitted that during the course of audit o....
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....Annexure- J and relevant extract of which is reproduced verbatim below. "Test Report - The sample is in the form of brown coloured viscous liquid, i) N = 12.9% ii) K20 = 0.003% iii) K205 = 0.2% iv) N.V.R. = 75.5% v) pH = 6.8% The sample is other than Mineral, Chemical and Organic Fertilizer (Animal/vegetable). It is not labelled as fertilizer. This type of product does not find mentioned under fertilizer (Control Order No.1985 as fertilizers). The sample is a mixture of proteins and Amino Acids which regulates the plant growth. The sample under reference can be considered as plant growth regulator." 19. It is further submitted that the petitioner was issued show cause notice (5 show cause notices) for the period of August, 2004 to September, 2011 proposing to recover Central Excise Duty of Rs. 7,89,29,431.00 under Section 11A of Central Excise Act, 1944 along with interest under Section 11AB/11AA of Central Excise Act, 1944 and various penalties under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. The show cause notices were adjudicated by the Commissioner, Central Excise,....
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.... to Classification and valuation matter are required to be brought into the notice of this Hon'ble Court prior to submitting parawise comments on the petition of the petitioner. 24. It is submitted that the order under dispute is an interim order passed by the Division Bench of the Hon'ble CESTAT, Ahmedabad. The Hon'ble CESTAT, Ahmedabad has neither dismissed the appeal filed by the petitioner nor has given any adverse judgment against the petitioner. The Division Bench has referred the matter to Larger Bench to answer the question on the issue of classification of the product, as the Division Bench of the Hon'ble Tribunal, Ahmedabad has found that there is crucial difference in facts in the decision of Tribunal in case of Northern Minerals Limited Vs. CCE as reported in 2001 (131) ELT 355 (Tri. Del), the order which has been relied upon by the petitioner before the tribunal in support of their classification of the product under Chapter 3101 of the Central Excise Tariff Act, 1985. 25. It is submitted that the Hon'ble CESTAT, Ahmedabad has constituted a Larger Bench to take up the above issue and hearing was held by the Larger Bench on 3rd April 2019. Howe....
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....ing of the judgment, the High Court certifies to be fit one for appeal to the Supreme Court. (b) any order passed (before the establishment of the National Tax Tribunal) by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or the value of goods for the purpose of assessment. (2) For the purpose of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment." 28. It is further submitted that this Hon'ble Court in case of the Commissioner of Central Excise and Customs, Vapi Vs. M/s. Sarla Performance Fibers Ltd in Tax Appeal no.2012 of 2010 vide order dated 19th January 2012 held, "We may notice that exclusion clause in subsection (1) of Section 35G is worded in an expansive manner and excludes all appeals arising out of orders of the tribunal relating among other things to the determination of any question having a relation to the rate of duty of excise. In other words, what is excluded from the purview of the High Court's jurisdictio....
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....ssue of classification of the product under Section 35D of the Central Excise Act, 1944, as the Division Bench of the Hon'ble Tribunal, Ahmedabad has found that there is crucial difference in facts in the decision of Hon'ble Tribunal in case of Northern Minerals Limited vs. CCE as reported in 2001 (131) ELT 355 (Tri. Del), the order which has been relied upon by the petitioner before the Tribunal in support of classification of their product under Chapter 3101 of the Central Excise Tariff Act, 1985. Therefore, it is submitted that the petitioner's submission that the tribunal is reopening the issue settled by the Hon'ble Apex Court is misleading and misinterpretation of facts. 30. It is submitted that the Hon'ble Tribunal has given a clear finding why don't they agree with the findings of the tribunal in case of Northern Minerals Limited Vs. CCE, which is reproduced hereunder : "It is apparent that most PGR perform only one function of either retarding growth or inhibiting growth or, deflolianting or stimulating growth. Thus, the observation of tribunal in the said case appears to be misplaced. The said decision has been approved by the Hon'b....
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.... this juncture. 32. It is submitted that the product under dispute in the instant petition and the product under dispute in case of Northern Minerals (supra) are totally different. It is therefore, submitted that the ratio of aforesaid judgment cannot be applied in the present case and hence, there is no infirmity in the order of the Hon'ble Tribunal to refer the issue to larger bench of tribunal for proper classification of the product. 33. It is submitted that the order of the tribunal under challenged is only an interim order and this order have not enforceability and the the same has not made any injustice or prejudice to the petitioner. It is further submitted that the Hon'ble Tribunal has already constituted a Larger Bench to answer the question raised by the Division Bench of the tribunal and the hearing of the Larger Bench has been adjourned on account of the present Writ Petition filed by the petitioner before this Hon'ble Court. 34. It is also submitted that the petitioner has appropriate legal remedy under Section 35 L of the Central Excise Act, 1944 before the Apex Court, if an adverse final order is passed by the Tribunal. Further, this Hon'ble....
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....ified if it is not palpably arbitrary. If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment." 37. It is submitted that the Hon'ble Court while discussing the applicability of Article 14 to taxing statutes, held "When it comes to taxing statutes, the law laid down by this Court is clear that Article 14 of the Constitution can be said to be breached only when there is perversity or gross disparity resulting in clear and hostile discrimination practiced by the legislature, without any rational jurisdiction for the same." It is therefore submitted that the contention of the petitioner that the interim order is ultra vires and violative of Article14 and Article 19(1) (g) of the Constitution of India is not correct. 38. It is submitted that the order under dispute is an interim order passed by the Division Bench of the Hon'ble CESTAT, Ahmedabad. It is submitted that the Hon'ble CESTAT, Ahmedabad has neither dismissed the appeal ....
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.... question of law." 41. It is further submitted that as per the provisions of Section 35 L (1) (b) of the Central Excise Act, 1944 an appeal against an order of the Tribunal relating to classification and valuation matters, shall lie to the Hon'ble Supreme Court. Section 35L of the Central Excise Act, 1944 is reproduced hereunder for ready reference. "Section 35 L (1) An appeal shall lie to the Supreme Court from - (a) any judgment of the High Court delivered (i) in an appeal made under Section 35G; or (ii) on a reference made under Section 35G by the Appellate Tribunal before the 1st day of July, 2003; (iii) on a reference made under Section 35H, in any case which, on its own motion or an oral application made by or on behalf of the party aggrieved after passing of the judgment, the High Court certifies to be fit one for appeal to the Supreme Court. (b) any order passed (before the establishment of the National Tax Tribunal) by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or the value of goods for the purpose of assessmen....
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.... Tax Appeals are dismissed." 43. Learned advocate for the respondents relyied on the following authority and submitted that the present petition is premature and petitioners have no case on merits and the petition deserves to be dismissed. (1) In case of Union of India Vs. Coastal Container Transporters Association, reported in 2019 SCC Online SC 274. 44. We have heard the learned counsels for the parties and perused the papers. 45. The petitioners by way of this petition has assailed the order of the Tribunal dated 29th October 2018 passed by the Central Excise and Service Tax Appellate Tribunal (CESTAT) whereunder the tribunal has referred the question to the Larger Bench as could be seen from the operative part of the order impugned in para6, which is reproduced as under : "6. In view of the above, the issue needs to be referred to a Larger Bench for determination of following question : " Is it necessary for a plant growth promoter to be able to simultaneously inhibit growth or otherwise modify (apart from promotion) plant processes, to qualify as plant growth regulator under heading 3808 of Central Excise Tariff Act, 1985. OR ....
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....ed jurisdiction and why the High Court should not embark upon examining these issues only when the interim order of reference to the Larger Bench is under challenge. 50. The entire controversy, which revolves around the issue as to whether the decision rendered by the Bench in Northern Mineral (supra) could be said to be so conclusive a decision as to leave no room for further examination of this Bench. The said decision is placed on record of this petition at page no.247. 51. It is required to be noted at this stage that the product in question before the Delhi Bench in case of Northern Mineral (supra) "Dhanzyme" and therefore, the majority discussion in the case of Northern Mineral (supra) was based upon the ingredients characteristics and constitution of the said product. Whereas in the instant case, the product is Siapton 10L. Thus, both the products are different. The Delhi Bench in case of Northern Mineral (supra) has recorded submission of the counsel for the appellant therein in para4. The relevant portion thereof deserves to be extracted here-in-below so far as it touches upon the aspect of the product, which was under consideration therein viz. Dhanzyme. "4....
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....egulator could not have any nutrient in it. Ld. Counsel referred to scientific literature on the subject and emphasised the point that plant growth regulators were organic compounds other than Nutrients, which in relatively small amounts could inhabit, promote or otherwise alter/modify physiological processes in plants. The appellants' product "Dhanzyme" contained nutrients and only promoted plant growth, which was a function squarely attributable to fertilisers. In this connection, counsel also referred to HSN Explanatory Notes, which also said that plant growth regulators were intended to inhibit or promote physiological processes in plants. Nutrients and amino acids present in "Dhanzyme" promoted growth of the plant as a whole and did not play any restrictive role like a plant growth regulator. Counsel also questioned the reasoning of the Commissioner that a fertiliser should be applied directly to the soil so as to increase its fertility and "Dhanzyme" liquid which was used for spray over the plant foliage could not be considered as a fertiliser. The appellants had marketed not only "Dhanzyme" liquid but also "Dhanzyme" in granular form. While "Dhanzyme" liquid formulation ....
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.... brand name "Dhanzyme". in the absence of any Chapter Note in Chapter 31 of the Central Excise Tariff Schedule creating a legal fiction that repacking of bulk product into smaller packings amounted to manufacture, the aforesaid repacking activity of the appellants could not be held to be a process of manufacture within the meaning of Section 2(t) of the Central Excise Act inasmuch as that activity did not bring into existence any commodity different in character, use or commercial identity from the bulk product. Therefore liquid "Dhanzyme" was not excisable and the demand of duty on the product is not sustainable. 7.2 As regards the appellant's granular product "Dhanzyme", we note that the product was obtained by spraying liquid "Dhanzyme" over granules of Bentonite clay and that the granules so obtained were to be applied to the soil, unlike liquid "Dhanzyme" itself which was for direct application to the plant. The Bentonite clay granules with a spray of liquid "Dhanzyme" over them are not the same product as liquid "Dhanzyme" in the mind of the ultimate customer i.e.. the farmer. While liquid "Dhanzyme" is to be applied directly to the plant, the granular product is to ....
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....hey are either natural or synthetic compounds and are applied directly to a plant to alter its life processes or structure in some beneficial way so as to enhance yield. improve quality. or facilitate harvesting. Plant hormones, i.e., phytohormones, are plantproduced growth regulators and, therefore, are naturally occurring plant substances. Plantgrowth regulators, however, apply to phytohorrnones as well as synthetic compounds." "Plant Physiology" (4th Edition) by Robert M. Devlin & Francis H. Witham gives the following description : "Plant regulators are organic compounds other than nutrients that in small amounts promote, inhibit, or otherwise modify a physiological process in plants". J.C. Johnson's 'Plant Growth Regulators and Herbicide Antagonists Recent Advances" introduces PGRs as under : "Plant growth regulators are compounds. mainly organic. other than nutrients which in relatively small amounts inhibit. promote or otherwise alter physiological plant processes". All the above literatures cited by ld. Advocate seem to be converging on the point covered by the HSN Note. They indicate that PGRs are natural or synthetic organic....
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.... the DR's reliance on the decision in Northern Minerals Pvt Ltd. v. CCE 1998 102 E.L.T. 182 wherein 4.5% aqueous solution of AlphaNaphthy Acetic Acid (Trade name: "Dhanumon") was held to be a PGR is equally unhelpful to the Revenue in the instant case. 'Floramin' and 'AlphaNaphthyl Acetic Acid' were chemically defined organic compounds. In the instant case, the Department appears to have had no case that the 'Dhanzyme'" brand products of the appellants were chemically defined organic compounds. 7.5 We would adopt the relevant reasonings of ours from the case of Leeds Kem for the purpose of deciding the classification of the present appellants' 'Dhanzyme" on granules. We hold that the 'Dhanzyme' on granules. cleared by the appellants during the material period was a biofertjlizer classihable under CSH 3101.00 chargeable to Nil rate of duty and no duty of excise was liable to be demanded in respect thereof." (Emphasis supplied) Thus, the Delhi Bench in case of Northern Mineral (Supra) did refer to the dictionary meaning and various discussion on "plant, growth, regulator and plant, growth promoter" to cullout fine distinction between the two. ....
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....on in the extracted portion of the order cannot be countenanced and deserves deprecation as the same was unwarranted. The question arises as to only on that count, other reasoning of the tribunal can be brush aside. 54. It is required to be noted that the decision of the Court and the tribunals are to be read not as textbook, but required to be read and applied in light of the facts prevalent thereafter. Bearing the aforesaid sentence of the tribunal occurring in the paragraph, which this Bench has found to be uncalled for, unwarranted and not appropriate. The discussion in respect of the product in question based upon the prima facie opinion of the tribunal requiring the tribunal to refer the matter to Larger Bench cannot be said to be so prejudicial to the petitioner to call for any interference. 55. The Court hasten to add here that the Court is also of the view that the learned counsel for the respondent is not wholly unjustified in pressing into service the submission and pleadings of the respondents' affidavit indicating that in such a scenario the Court should be slow in interfering with such interim order. 56. The Court reiterating at the cost of repetition tha....
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....e extent of saying that the judgments are not read as Euclid's theorems as could be seen from (2010) 13 SCC 255. Bearing this principle in mind, the Court had to examine the judgment of the Delhi Bench of CESTAT in Northern Minerals (supra) and relevant paragraphs extracted hereinabove. The plain and simple reading thereof would indicate that there was a discussion, which can be said to be a product specific or producentic viz. "Dhanzyme" and supposing there was a case in respect of "Dhanzyme" or a product having all the similar ingredients that a "Dhanzyme" and also applicability perhaps there would have been no action or permissibility in the tribunal to make any reference as it would not be permissible at all. The Court has already deprecated the tribunal's reference to the Apex Court in highlighted sentence, but that in itself would not render entire order of the tribunal impugned in this petition vulnerable as it was a duty cast upon the petitioner to establish imminently that the product in question in this petition being Siapton 10L was almost similar to Dhanzyme in its ingredients, applicability and construction so as to make the decision of Northern Mineral (sup....