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TaxTMI 
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2020 (2) TMI 1025
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....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 bringing the said product in their factory, they carry out activity viz; r....
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.... 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 under Section 11A(1) of the Central Excise Act, 1944; to recover interest under Sect....
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.... 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 question was required to be "compound" and not "mixture". The active ingredient contained in the product was either nitrogen or phosphorus or po....
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....inerals 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 that order it is held that "Plant Growth Regulators under Chapter 3808 must be a separate chemically defined compound." It is submitted that on such aspec....
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....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 merits the statutory civil appeal filed by the Department against the said judgment and order [2003 (156) E.L.T.AI6 (page251)]. Thus, on merits, the issues stand settled by the Hon'....
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....o 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 reasoning of the Hon'ble Tribunal and has dismissed the Department's statutory appeal on merits, the Hon'ble Tribunal has sought to hold that the judgment in Northern Minerals is wrong and, therefore, referred the same to the larger Bench des....
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.... 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 where even existence of small amounts of enzymes was held to be okay. Thus, there can be no doubt that the product in the case of Northern Minerals and in the present case is exactly the same, i.e. based on amino acids and peptic (peptics are short chain of amino acids). It is thus ....
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....le 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 in case where there is an exfacie lack of jurisdiction or some error which goes to the very root of the matter. However, merely because a appeal lies to the Hon'ble Supreme Court on classifications under the Statute, the powers under Article 226 of the Constitution are not abrogated. 22. Furthermore, when fundamental e....
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.... 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 of records of the petitioner in December 2007, it was observed that the assessee has been classifying their final product "Siapton 10L" as "Fertilizer" under Chapter sub heading No.31010099 of Central Excise Tariff Act, 1985 and clearing the products without payment of duty. On being asked the assessee produced following documents of the product before the Central Excise audit of....
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....r 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, Customs & Service Tax, SuratII Commissionerate vide Order in Original No.65 to 69/Commr./SuratII/ 2012 dated 10th October 2012, whereby, the Adjudicating authority confirmed the duty demanded in the show cause notices along with interest and penalty. 20. It is submitted that thereafter, three more show cause notices were issued for the subsequent period of October 2011 to March 2013 demanding Central Excise duty amounting to Rs. 2,68,92,332.00 under Sec....
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....ch 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. However, the further hearing was deferred/adjourned as the petitioner has filed the present SCA before the Hon'ble High Court. The Larger Bench of the Hon'ble Tribunal passed the following order vide order dated 3rd April 2019. "The Larger Bench has assembled today as a Division Bench of this Tribunal referred as issue for determination by the Larger Bench. It is after the Larger Bench has assembled, that the order dated 25th March 2019 passed by the High Court of Gujarat in the....
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....lity 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 jurisdiction is not merely an order of excise but any order which concerns determination of any question which has relation to such rate of duty of excise. Expression "any question having a relation to the rate of duty" is a wide one. With above discussion, if we revert back to the facts of the case, as already noted, the dispute between the parties and which came to be settled by the tribunal by the impugned order is with respect to the question whether the manufacturers are required to pay education cess on the computation of the customs duty and the CVD o....
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....ssion 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'ble Apex Court, however, the approval of Hon'ble Apex Court does not mean approval of all grounds of the order. In the said case, the product was being applied to soil as against the fact that PGRs are not applied to soil but directly to plant. A fact recorded in the said order, in para 7.3, reproduced above. Thus, in the said case of facts were different on a crucial issue. In view of the above, the conclusion reached by the Tribunal that - "In the instant case, the Department had no case that "Dhanzyme" could inhibit or otherwise modify (apart from promoting) pla....
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....njustice 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 Court has no jurisdiction to decide an issue or order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of the goods for purposes of assessment. Therefore, it appears that the petitioner is indirectly trying to get an order from this Hon'ble Court on the issue of classification of the product by filing a writ petition against the interim order of the Hon'ble Tribunal, for which this Hon'ble Court has no jurisdiction for the same. 35. It is submitted that the petitioner's submission that the impugned order is without ....
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....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 of 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 Tribunal, Ahmedabad has found that there is crucial difference in facts in the decision of Hon'ble Tribunal in case of Northern Minerals (supra) 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. 39. It is contended that the Hon'ble CESTAT, Ahmedabad has const....
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....e 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 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." 42. 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 relat....
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....e 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 So long as it promotes growth by modifying life processes of a plant it qualifies as plant growth regulator under heading 3808 of Central Excise Tariff Act, 1985." 46. Learned counsel for the petitioner submitted that the tribunal bench ought to have appreciated the fact that the decision rendered by the Delhi Bench in case of Northern Mineral (supra) ought to have been followed by the tribunal as the said decision was upheld by the Supreme Court as the appeal preferred thereupon had been dismissed on merits. The Supreme Court's order dismissing appeal on merits had effect of merger and therefore, the observations of Northern Mineral (supra) could be said to be totally accepted. The Supreme Court leaving no room for any deviation by anyone a....
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....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. Shri V. Lakshmikumaran, Counsel for the appellants, submitted that appellants had purchased Biozyme from Samruddhi and Wockhardt under brand names 'Sampdazyme' and 'Wokazim' respectively and had only carried out repacking of that product into smaller packings of 1000 ml, 500 ml, etc., for sale under their own brand name "Dhanzyme". The suppliers of Biozyme had classified their product under CSH 3101.00 and the Department had not proposed to revise that classification. There was no Chapter Note in Chapter 31 of the Central Excise Tariff Schedule which provided any legal fiction (as in Chapter Note 2 of Chapter 38) defining the activity of repacking of bulk product as 'manufacture'. Therefore, Counsel submitted, there was no justification on th....
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....ole 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 was applied to the plant, the granular form was applied to the soil to provide nutritional support to the plant. Fertilisers could be applied on the plant foliage as well as to the soil. For instance, urea granules were applied to the soil, whereas urea solution was used as a liquid spray on plants. In any case, urea was a fertiliser only. Referring to literature on the subject, ld. Advocate submitted that any substance which contained amino acids (as a source of nitrogen to plants) could only be classified as fertilisers. "Dhanzyme" was rich in amino acids and hence classifiable only as a fertiliser. He submittted that the presence of traces of hormones like cytokinins and auxin precursors in "Dhanzyme" would not take the product outside the definition of fertilizer ....
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....t 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 be applied to the soil. Therefore, in the mind of the Fustomer, granular "Dhanzyme" is different in character and use from liquid "Dhanzyme". It would follow that granular 'Dhanzyme" emerged out of a process of "manufacture" within the scope of Section 2(t) of the Act and the product would be excisable. However, we 0nd that on the classification of the product. Id. Commissioner has not taken into account all the materials placed before him by the appellants, nor has he applied his mind to the ciassihcation of the bulk product as approved by the department at the end of Samruddhi and Wockhardt. 7.3 The five reasons stated in the SCN for classifying 'Dhanzyme' as Plant Growth Regulator (in short. PGR) under SH 3808.20 appear to have been approved in toto in the impugned order. Those rea....
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....rs 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 compounds other than nutrients and that. when applied in small amounts, they can alter physiological processes in plants. In the instant case, the Department had no case that "Dhanzyme" could inhibit, or otherwise modify (apart from promoting) plant processes. The appellants plea that the product contained only aminoacids and other nutrients and. therefore, only promoted plant growth has not been successfully dislodged in the Commission's order. KirkOthmer says that PGRs are directly applied to plants. The appellants' 'Dhanzyme' on granules was applied to sell only. The Department has had no dispute about this fact. From the literature and other evidence on record, we find that the appellants' product in question is only a biofertilizer capable of promoting plant growth by providing nutritional support. The suppliers of 'Biozyme' the b....
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....uty 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. But the research on this aspect incorporated in para 7.3 was bearing in mind the product "Dhanzyme" and its ingredients, applicability, methodology of its application and usage. In other words, it can well be said that the discussion and research was producentic viz. "Dhanzyme". 52. Can this discussion in para 7.3 be classified as an authoritative pronouncement upon and laying down the said parameters to be applied to all the products for classifying then, either to be plant growth regular or plant growth promoter. If one examines the judgment from that angle, one has to accept that the said judgment is essentially contain research which is producentic viz. "Dhanzyme" and therefore, it cannot be said that the scope of further examination was ruledout. We hasten to add here that had there been a specific laying down of the parameters in the judgment perhaps those parameters would ha....
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....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 that there cannot be any dispute qua the proposition of law canvassed at the bar on behalf of the petitioner that the Supreme Court's cryptic approval or the view is also and always binding upon all the Courts and adjudicating forums in the country and no forum can deviate therefrom. 57. This proposition of law needs no further elaboration and therefore, this Court is of the view that the precedent, if any, needs to be followed. However, this proposition of law cannot be stretched so as to compel the adjudicatory for a to overlook the distinguishing facts which may wholly takeout the case from the purview and covering by the view of the Court, whose judgment is cited as precedent. Therefore, it is always said that the precedents are to be read in its totality when they are laying down the proposition of law. 58. Time and again the Apex Court has in number of decisions ruled that the judgment of the Cour....