9911796707
TMI Blog2008 (5) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... oil application and for foliar application. The Ministry of Agriculture has granted registration to the assessee's product(s) as "fertilizer" in terms of Section 2(h) of the Fertiliser (Control) Order. 4. By show cause notices dated 26.8.02, 25.2.03, 1.10.03 and 24.5.04, the Department alleged that the assessee had misdeclared that the impugned product(s) contained nitrogen and had cleared the same without payment of duty. According to the Department, the label on each of the products of the assessee indicated the composition of each of the several products. The label indicated the percentage of zinc, ferrous, manganese and boron (micronutrient elements). In the label there was no mention of N (nitrogen), P (phosphorus) or K (potassium). According to the show cause notices, the chemical analysis of the samples confirmed the fact that fertilizing elements N, P or K were not there in "micronutrient compounds" of the assessee. According to the show cause notices, the mixtures manufactured by the assessee did not contain N, P or K as essential constituents. That, in any ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting products and plant-growth regulators, disinfectants and similar products, put up as described in Heading No.38.08." 9. We also quote hereinbelow CH 3808 of the Central Excise Tariff which reads as below: "CHAPTER 38 MISCELLANEOUS CHEMICAL PRODUCTS Heading No. Sub- heading No. Description of goods Rate of duty (1) (2) (3) (4) 38.08 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulphur-treated bands, wicks and candles, and fly-papers) 3808.20 Plant growth regulators 16% 3808.9 Other 16% 10. We also quote hereinbelow Circular No.392/25/98-CX., dated 19.5.1998 issued by CBEC which reads as follows: "Micronutrients—Classification of [Chapter 28/31] Circular No. 392/25/98-CX., dated 19-5-1998 [From F.No. 106/1/98-CX.3] Government of India Ministry of Finance (Department of Revenue), New Delhi Subject : Central Excise - Classification of Micronutrients - Clarification Regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm 'Other Fertilizers' has to be determined in the light of Note 6 of Chapter 31. Further, the specific exclusion of separate chemically defined compounds as laid down in the HSN Explanatory Notes to Heading 3105.90, must also be borne in mind. If, the micronutrient is a separate chemically defined compound, it will be classifiable under Chapter 28/29. If not so, and if in accordance with Note 8 to Chapter 31, it contains N, P or K, it will be classifiable under Chapter Heading 31. 6. Further it is also stated that notification under F.C.O. is irrelevant for deciding classification under the Central Excise Tariff and regardless of such notification, the appropriate consideration should be :- (i) whether or not the micronutrient in question is a separate chemically defined compound. If it is, then classification under 31.05 is ruled out; and (ii) if it is not, whether it contains N, P or K as laid down in the Explanatory Notes. 7. Therefore, it is clarified that classification of micronutrients may be done in accordance with the above guidelines. 8. The above clarification may be brought to the notice of the lower field formations and the trade interests may also be suitably a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic entry and, therefore, the specific entry will override the general entry in the matter of classification. 12. The order of the Adjudicating Authority was overruled by the Tribunal which came to the conclusion by the impugned judgment that PGRs are chemical compounds; that in the show cause notices there was no allegation made by the Department that the impugned product(s) was a chemically defined compound; that in fact the impugned product(s) was a ixture of various inorganic substances and, therefore, it cannot be classified under CSH 3808.20. According to the Tribunal, classification of "micronutrients" has been the subject-matter of three circulars issued by CBEC, the first was dated 24.5.90 in which micronutrients were classified under CH 38.08 on the ground that it did not contain nitrogen, phosphorus or potassium; the second was issued on 21.11.94 in which it was stated that micronutrients with or without N, P, K stood recognized as a fertilizer and on 19.5.98 third Circular was issued clarifying that in order to classify micronutrients two tests are required to be followed, namely, whether or not the micronutrients is a separate chemically defined compound and if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manganese, boron, copper, cobalt and chlorine. The nutrients that are most likely to limit plant growth are nitrogen, phosphorus and potassium. (iii) According to the "Scientific Encyclopedia" by Van Nostrand, a 'plant growth regulator' is essentially a chemical substance which is concerned with plant growth and which provides tonic to the plant growth. It is a plant hormone. It is an organic compound which controls growth. (iv) According to the www.en.wikipedia.org "micronutrients" are vitamins and minerals. Vitamin is an organic compound. Vitamins are classified by their biological activities and not by their structure. Vitamins have diverse bio-chemical functions including functions as hormones, therefore, plant hormones are also known as plant growth regulators. Plant hormones are made of chemicals that can vary in structure from one plant to another. (v) According to the "McGraw-Hill Encyclopedia of Science & Technology" materials added to the soil or applied directly to crop, to supply elements needed for nutrition of the plant is called as "fertilizers". The chemical elements-nitrogen, phosphorus and potassium are macronutrients or primary fertilizer elements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the constituent element of macronutrient and not of micronutrient. 21. Coming to PGRs, it needs to be emphasized that they are organic compounds, other than nutrients, which in small quantity inhibits, promotes, alters or modifies physiological processes in plants. 22. In the present case, the impugned product(s) is "multi micronutrient". It is contended on behalf of the assessee that the impugned product(s) contains nitrogen, hence it is classifiable as "other fertilizer" under CSH 3105.00. It is contended that nitrogen is an essential constituent of the impugned product(s) and, therefore, the same is classifiable as "other fertilizers". 23. Therefore, the relevant question to be asked is- what is the method of manufacture of "multi micronutrient"? This question becomes relevant as the impugned product(s) is a mixture of various inorganic substances. It is the "method of manufacture" which has a strong bearing on the question whether the product(s) needs to be classified under CSH 3808.20 or under CSH 3105.00. This aspect has not been examined by the Adjudicating Authority. 24. It is alleged by the Department that N, P or K are not the essential constituents of micronutrient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of invocation of larger period (which is separately dealt with hereinafter) we set aside the impugned judgment dated 26.2.07 of CESTAT and remit the matter to the Adjudicating Authority for de novo determination of the said case in accordance with law. 27. On the question of invocation of extended period of limitation, we are in agreement with the view expressed by the Tribunal that the larger period of limitation was not invokable by the Department. As stated above, three Circulars have been issued by the Department. Till today, the controversy regarding the classification of "micronutrient fertilizers" was not settled. There is even a conflict of views between Ministry of Finance and Ministry of Agriculture. In the circumstances, question of invoking extended period of limitation does not arise. It is well-settled that mere non-declaration is not sufficient to invoke the larger period but some positive act of suppression is required for invoking larger period of limitation under Secton 11A of the Central Excise Act, 1944 [See: Padmini Products v. Collector of Central Excise - 1989 (43) ELT 195 (SC) ]. Therefore, in the present case, there is no warrant to invo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
