TaxTMI 
TaxTMI 
2022 (12) TMI 1049
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....2922 5090 of Schedule to Central Excise Tariff Act, 1985. Consequently, differential duty liability of Rs. 18,74,59,366/- was sought to be fastened on the appellant herein under section 11A of Central Excise Act, 1944 along with applicable interest under section 11AA of Central Excise Act, 1944. 2. Learned Senior Counsel appearing for the appellant contends that the foundation of the proceedings initiated against them are the findings in the test report coupled with circular no. 1022/10/2016-Cx dated 6th April 2016 of Central Board of Excise & Customs (CBEC) articulating that 'essential' in note 6 in chapter 31 of Schedule to Central Excise Tariff Act, 1985 means 'significant', statement of an employee of the appellant, incharge of production facility, denying the presence of nitrogen, phosphorous or potassium in the said products and the packaging and label indicating these to be 'plant growth regulators, plant growth promoters/micro nutrients' is not sustainable. 3. Learned Senior Counsel further informed that the circular, relied upon by the adjudicating authority, has since been rendered inapplicable by the decision of the Hon'ble High Court of Bombay, in their own case, ....
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....dients is very low because a larger use may be harmful for the human body. [Puma Ayurvedic Herbal (P) Ltd. v. C.C.E., Nagpur - 2006 (3) SCC 266 = 2006 (196) E.L.T. 3 (S.C.)]; State of Goa v. Colfoax Laboratories - 2004 (9) SCC 83 = 2003 (158) E.L.T. 18 (S.C.)]; B.P.L. Pharmaceuticals v. C.C.E. - 1995 Supp (3) SCC 1 = 1995 (77) E.L.T. 485 (S.C.)]. 31. However, there cannot be a static parameter for the correct classification of a commodity. This Court in the case of Indian Aluminium Cables Ltd. v. Union of India, 1985 (3) SCC 284 = 1985 (21) E.L.T. 3 (S.C.), has culled out this principle in the following words : "13. To sum up the true position, the process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in with the expression used in the Tariff...." 32. Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance [s....
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....cleaning or degerming their hands and scrubbing the surface of the skin of the patient that portion is operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a "medicament" which would fall under chapter sub-heading 3003 which is a specific entry and not under chapter sub-heading 3402.90 which is a residuary entry.' 4. Furthermore, reliance was also placed on the decision of the Hon'ble High Court of Bombay in Godavari Khore Cane Transport Co v. Commissioner of Central Excise [2013 (29) STR 31 (Bom.)] holding that '3. It is not in dispute that although the employee of the assessee during the course of recording statement had admitted and expressed willingness to pay service tax, in the affidavit-in-reply to the show-cause notice, the liability to pay service tax was specifically denied and even before the adjudicating authority it was contended that service tax was not leviable. Though documentary evidence in that behalf were not produced before the adjudicating authority, the same was produced before the CESTAT and argued that the levy of service tax for the period involved herein is unjustified....
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....sides, we have considered the literature made available to us during the hearing. Before proceeding to render our decision, it is necessary to ponder over the importance of fertilising agents, the scheme of the Schedule of the Tariff, the manner in which classification is mandated to be undertaken, the scope of the circulars on the subject and, not the least, the precedent decisions. 11. Plant life is critical to the existence of living world; the single distinguishing feature of the fundamental dichotomous grouping of living world is the absence of ability to generate food in the life process of the animal kingdom. Animals feed upon other animals and plants but animal life would have been extinct in the absence of plant life which is blessed with the capacity of photosynthesis. Plants deploy resources available around them at three levels. Hydrogen, carbon and oxygen are drawn from air and water while the fertilizing agents are drawn from the soil. These consist of major and minor fertilizers with nitrogen, phosphorous and potassium being the former. The correction of deficiency in, or the enrichment of, any of these is remedied by human intervention. Thus fertilizers are....
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....acilitated by the regulatory mechanism, under central and/or state legislation, for 'fertilizer' and 'pharmaceutical' industry. Statutory authorities administer these regulations and, while we concur with Revenue that jurisdiction assigned over some chemicals to these regulators should not, generally, influence the classification, that very jurisdiction indicates the use. 14. Of no less import are the notes in chapter 31, of which note 1(b) excludes separate chemically defined compounds but with the qualification 'other than those answering to the descriptions in Note 2(a), 3(a), 4(a) and 5 below' implying that where the use is unambiguous, its twin heading in another chapter merits discarding. These notes refer to 'mineral or chemical fertilizers' distinguished by the presence of primary element, viz., nitrogenous, phosphatic or pottasic, in combination, besides 'ammonium dihydrogen orthosphate' and 'diammonium hydrogen orthophosphate'. From a straight reading of the relevant notes, it would appear that classification as 'fertilizer' is merited on clearance of goods specified in the referred notes pertaining to heading 3102, 3103 and 3104 cleared in bulk....
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....sfied with a claim for a particular rate. We refer to the decision of the Hon'ble Supreme Court in Hindustan Ferodo Ltd v. Commissioner of Central Excise [1997 (89) ELT 16 (SC)] and in HPL Chemicals v. Commissioner of Central Excise, Chandigarh [2006 (197) ELT 324 (SC)]. Having made ourselves clear on this point, we do not, at this stage, examine the merit of adopting rule 4 supra to which we shall address ourselves presently. Board of Excise & Customs are relevant to this proceeding. 16. Four circulars issued by Central Having considered the importance of the products, it was thought fit, in circular no. 26/90-CX dated 26th June 1990, that 'micronutrient' should be classified as 'plant growth regulator' under heading 3808 of First Schedule of the Central Excise Tariff Act, 1985. On reconsideration, in circular no. 79/79/94-CX dated 21st November 1994, it was advised that 'micronutrients' listed in Fertiliser (Control) Order, 1985, and whether containing nitrogen, phosphorous or potassium or not, should be classified under heading 3105 of the First Schedule to the Central Excise Tariff Act, 1985; apparently, the wisdom of the regulatory authority in bringing 'micronutrient....
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....tation should apply to the classification as well as for coverage in exemption notification. The reference to Fertilizer (Control) Order, 1985 in the exemption notification should apply equally to classification as 'fertilizers' especially in conjunction with note 6 of chapter 31 of First Schedule of the Central Excise Tariff Act, 1985. In paragraph 5, the circular overlooks its own instruction in paragraph 2.3 to direct classification under residual heading 3824 as 'chemical products not elsewhere specified' if these micronutrients be composed only of trace elements. This instruction to classify 'micronutrients' under the residual sub-heading 3824 90 of a residual chapter 38 of the First Schedule to the Central Excise Tariff Act, 1985 runs counter to the statutory mandate to assign classification with reference to notes of chapter and sections in rule 1 of the General Rules for Interpretation of the First Schedule of the Central Excise Tariff Act, 1985; note 1(a) of chapter 38 clearly excludes separate chemically defined compounds, barring a few, from coverage under this chapter and, if 'micronutrients' are not fertilizers, they are to be classified on merit based on their composi....
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....wth regulator.' The observations that Learned Authorized Representative highlighted to presage approval of the stand of Revenue is nothing but reiteration of the view of the Hon'ble Supreme Court in re Ranadey Micronutrients that the circular would prevail unless its validity was in doubt. We have expressed ourselves sufficiently on the credibility of these circulars. 19. With this trove of knowledge, we turn to 'plant growth regulators.' Plants gather nutrients from air, water and soil. These, in normal circumstances, may be sufficient for normal growth of, and yield, from plants. While air and water are not within the power of humankind to replicate or relocate, enrichment of deficient soil is. This is where macronutrients, comprising of nitrogen, phosphorous and potassium, in various chemically defined compounds supplied through fertilizers, are important. Micronutrients in trace quantity also remedy deficiency of such soil. These are administered by adapting the metal element with a chelate to attach a chemical that would either prevent the alkalinity of soil from rendering a 'micronutrient' insoluble and unusable by the plant or overcome imperviousness of foliage that....
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.... not sufficient to engineer the growth of a plant in a desired way. Hormones are signalling molecules that direct a cell to act in a particular manner. Hence these regulators, grouped as 'plant growth promoters' (auxins, gibberllins and cytokinins) and 'inhibitors' (abscisic acid and ethylene), are not essential for plants but are a means for human interference in normal plant growth distinct from nutrient enrichment. As regulators are not nutrients, 'plant growth regulators' does not include 'micronutrients'. In accordance with our findings on the scope of classification under heading 3808 of First Schedule to the Central Excise Tariff Act, 1985, 'plant growth regulators' are such as may be generically described elsewhere but are made available as 'plant growth regulator' by the manufacturer and are subject to such regulation as such specific products are bound, under particular statutes, to comply with. 22. Therefore, we may sum up our findings thus: i. 'Micronutrients' and 'macronutrients' are required for agriculture as fertilizers. In classifying them thus, it is the intended use that must prevail as inferred from the scheme of Schedule. 'Micronutrients' are ....