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2019 (7) TMI 459 - CESTAT AHMEDABADClassification of goods - Power Gold - Bio Gold - NPK Fertilizer, Organic Manure and Soil Conditioner - product Power Gold classified under CETSH 3103 9000 and Bio-Gold under CETSH 310290 90 or not? - benefit of Sl. No. 40 of Notification No. 1/2011 - CE dated 1.3.2011 till 16.3.2012 - Revenue proposed to classify the Soil Conditioner and Organic Manure products as “Chemical products not elsewhere specified or included” under CETSH 38249090 and to demand duty of ₹ 3,72,78,082/- for the period October 2011 to March 2016 on NPK Fertilizers, Soil Conditioner and Organic Manure along with interest and penalty u/s 11AC and Rule 25 of Central Excise Rules, 2002 - extended period of limitation - penalty. HELD THAT:- A bare perusal of both the entries under Chapter 31 and Chapter 38 when read with Chapter Note -3 to Chapter 31 would clearly reveal that Chapter 31 deals with Fertilizers whereas 3824 deals with miscellaneous chemical products. The impugned products as per Annexure- 4 to show cause notice consists of various constituents. As per chemical examiner test report in case of NPK Fertilizer the composition of goods is Nitrogen 29.70%, Phosphorous (as P2O5) 11.60%, Potassium (as K20) 10.37, In Power Gold the composition is Calcium (Ca)-21.1%, Magnesium (Mg)-5.9%, Sulphur (S)20.9% and in Bio-Gold composition is Carbon-13.92%, Moisture-12%, Ash-76%. In case of Bio Gold the report also says that the sample is composed of carbon bearing material and small amount of Phosphorous, Potassium and nitrogen bearing inorganic compounds alongwith clay matter. However the test report does not give percentage of same. Coming to the constituents we find that as far as NPK Fertilizer is concerned there is no doubt about its classification based upon constituents. Even the show cause notice accepted its classification under CETSH 3101 but it is not known as to why the duty was demanded. Nor the impugned order discusses anything about its classification and hence there is no case of revenue for classification under any other chapter. In case of Power Gold from test reports the constituents are apparent i.e. it consists of Single Super Phosphate (SSP), Gypsum and other inorganic substances, viz. calcium, magnesium, sulphur, mud, dolomite and bentonite and thus it clearly meets the requirement of Chapter Note-3 (a) (iii) (c). to cover it under CETSH 3103. The contention of adjudicating authority that Power Gold is a Soil Conditioner and therefore not a fertilizer is clearly untenable in law as CETSH 31.03 covers the phosphatic fertilizer whether mineral or chemical. There is no basis for holding that soil conditioner is not a fertilizer. The certificate issued by the Directorate of Agriculture, Gandhinagar clearly considers Power Gold as a Fertilizer. Since Power Gold is made from Superphosphate and is on test found to contain phosphorous, it will clearly fall under Heading 31.03 - As regard Bio Gold (organic manure), we find that the same is made from poultry manure. On test, it is found to contain phosphorous, potassium and nitrogen. We also find that the test report of Bio Gold matched with the specifications of organic manure given in Schedule IV (S.No. 4) of Fertilizer Control Order 1985. The certificate issued by the Directorate of Agriculture, Gandhi Nagar also considers Bio Gold as fertilizer. Extended period of limitation - penalty - HELD THAT:- The issue involved is of classification and hence no case of suppression or intention to evade duty is made out. Appeal allowed - decided in favor of appellant.
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