TMI Blog2008 (5) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... product(s) "multi micronutrient" (the impugned product) would fall under CSH 3105.00 as contended by the respondent-assessee, hence these civil appeals are filed by the Department. 2. For the sake of convenience we reproduce hereinbelow the facts as reproduced in the case of Commissioner of Central Excise, Bangalore v./s.Karnataka Agro Chemicals [Civil Appeal Nos. 378-381 OF 2008]. 3. Respondent-assessee manufactures "multi micronutrients" for soil 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 (ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther fertilizers 16% 8. We also quote hereinbelow Explanatory Note 1 to Chapter 38 of the Central Excise Tariff which reads as below: "CHAPTER 38 MISCELLANEOUS CHEMICAL PRODUCTS Notes:- 1. This Chapter does not cover: (a) Separate chemically defined elements or compounds with the exception of the following: (1) Artificial graphite (heading No.38.01); (2) Insecticides, rodenticides, fungicides, herbicides, anti-sprouting 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sometimes to foliage to supply nutrients to sustain plants and promote their abundant and fruitful growth. The elements that constitute these plant foods are divided into three classes - (1) Primary-Nitrogen (N), Phosphorous (P) and Potassium (K), (2) Secondary - Calcium (Ca), Magnesium (Mg) and Sulphur (S) and (3) Minor or so called micronutrients - Iron (Fe), Manganese (Mn), Copper (Cu), Zinc (Zn), Boron (B) and Molybdenum (Mo). However, for the purpose of classification of micronutrients as 'Other Fertilizers' in Heading 31.05 CET, the scope of the term '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "fertilizing element" and that the said nitrogen was used only as a chelating agent and, therefore, it was not sufficient enough to act as a fertilizing element, consequently the impugned product(s) fell under CSH 3808.20. According to the Department, PGR is an item in CH 38.08. The said item is a specific item which would override the item "other fertilizers" in CSH 3105.00. According to the Adjudicating Authority "fertilizer" is a general entry whereas PGR is a specific 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Trees and Shrubs" plants require 17 elements for normal growth. Carbon, hydrogen and Oxygen are found in air and water. Nitrogen, potassium, magnesium, calcium, phosphorous and sulfur are absorbed from the soil. The last 6 elements are used in large amounts by the plant and are called macronutrients. There are 8 other elements which are used in smaller amounts. These are called micronutrients or trace elements which include iron, zinc, molybdenum, 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not amount to "essential constituent" in terms of explanatory note 6 to Chapter 31. 19. We have examined several reference books, some of which are quoted hereinabove, which shows that micronutrients per se, as against macronutrients, do not contain N, P or K. 20. Micronutrient(s) functionally may be a Fertilizer but not in terms of composition. In fact, N, P or K is 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 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izers" in CSH 3105.00 is the question which needs to be examined by the Adjudicating Authority as it is the case of the Department that the assessee has added nitrogen only as a pretence so that the impugned product(s) could be classified as "other fertilizer" under CSH 3105.00. 26. For the aforestated reasons, on the point of classification and not on the 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-sett ..... X X X X Extracts X X X X X X X X Extracts X X X X
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