2022 (8) TMI 103 - CESTAT MUMBAI

Classification of goods - Fertilizers or Plant Growth Regulators (ZP-770 Kg.) - to be classified as ‘fertilizer’ under CETH 3101 or as ‘plant growth regulator’ under CETH 3808? - Rule 3(c), the General Rules for Interpretation of Central Excise Tariff Act, 1985 - period November, 2006 to September, 2010 - period October, 2010 to June, 2011 - invocation of extended period of limitation - HELD THAT:- The emphasis of the rule 3(c) is on the heading which provides the most specific description. The goods are to be classified as per their description and the general description should not be preferred before the specific description. Moreover, in terms of Rule 3(b), mixture consisting of different materials is to be classified with reference to the major component which gives it the essential character. We find that in the case of impugned product, the major constituent is seaweed powder extract. The learned adjudicating authority has not appreciated the provisions of Rule 3(a) and (b) correctly and has jumped directly to Rule 3(c) of the General Interpretation Rules, which is not correct to our understanding. The classification of the goods should be done by the reference of the heading and chapter note.

It is pertinent to note the Explanation given in Chapter 12.12 of HSN, seaweed and other algae and it says that this Heading covers all seaweeds and other algae whether or not edible, they may be fresh, chilled, frozen, dried or ground. Seaweeds and other algae are used for various purposes (e.g. pharmaceutical products, cosmetics, human consumption, animal feeding, and fertilizers) and other that should be as such that this heading excludes Fertilizers of Heading 31.01 or 31.05. A plain reading of this note indicates that seaweed and other algae should also be used as fertilizer and when done so, they fall under Heading 3101 or 3105 and even otherwise by referring to Note 3(b) of General Interpretation Rules, the product in dispute falls under CETH 3101.

Thus, it was held by the Tribunal in the case of CCE, ROHTAK VERSUS M/S. SAFEX CHEMICAL INDIA LTD. [2017 (9) TMI 140 - CESTAT CHANDIGARH] that though the chemical examination report indicates the presence of ingredients like, Auxin and Cytokinins are known to find use as Plant Growth Regulator, percentage compositions of these ingredients have not been ascertained. It cannot be ruled out that these ingredients can be present in the small traces in the sample; the same can be called as fertilizer also.

It is seen that such enzymes help in plant growth regulation are present but in only small traces i.e. 0.26% and 0.53% prior to 03.07.2010. For the period after 03.07.2010, even the traces are absent - the impugned goods cannot be classified as plant growth regulator just because small trace of 6-BA and 4-CPA are present.

Invocation of extended period of limitation - HELD THAT:- The appellants have stated that they have submitted their items and given all the details to the Department in 2006 itself and as such, no intent to evade payment of duty by way of suppression, concealment, mis-representation etc. can be alleged and, therefore, the extended period cannot be invoked - the contentions of the appellants are agreed upon, however, as it is held that the appellant’s submissions are acceptable on merits, the issue of classification will not alter the position of the case in any manner.

Appeal allowed - decided in favor of appellant.