TMI Blog2018 (6) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... to go to the root of the issue. The ‘fertilizers’ and ‘pharmaceuticals’ are favoured enough to merit separate chapters on their own, justified by their importance for the human race. At the same time, they, being chemicals, are ensconced in section VI of the Schedule to the Central Excise Tariff Act, 1985, i.e. PRODUCTS OF CHEMICAL AND ALLIED INDUSTRIES – reflecting strict adherence to the arrangement of goods in the Schedule. The section, commencing with organic chemicals and inorganic chemicals, recognises that ‘fertilizers’ and ‘pharmaceuticals’ may fall under either and acknowledges that they are to be distinguished from their doppelganger in the other two chapters. We are unable to approve of the proposition made on behalf of Revenue that the classification claimed should have been rejected. Rejection of a claimed classification is not an end in itself as duty liability can be computed only after application of the rate legislated by Parliament to the appropriate value. The presence of nitrogen in chelates is sufficient to bring it within the ambit of heading 3105 of First Schedule of the Central Excise Tariff Act, 1985 owing to its indispensability despite the negli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Senior Counsel may be anguished by our choosing to describe the impugned goods as chemicals we believe that it may not be a cause of cavil. For that is what fertilisers are and our choice is amply justified given that the rival classifications lie within section VI of the First Schedule of the Central Excise Tariff Act, 1985, i.e. PRODUCTS OF THE CHEMICAL AND ALLIED INDUSTRIES. Yet, fertilisers are privileged enough to warrant an entire separate chapter in this section of the Schedule. We can posit that this is not without design. Fertilisers are critical to national policy formulation across the globe for its contribution to agriculture which is indispensable as the plant kingdom alone is capable of generating its own food and providing sustenance to the animal kingdom not being blessed with the wherewithal to do so. And in the complexity of that very Schedule lies the discord. 5. The dispute traces its origin to adoption of the new tariff in 1985 with its comprehensive enumeration this is apparent in the decisions cited before us. The new system afforded the advantage of re-engineering the tax structure but, in the process, the certainty of intent of government that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phosphorous and potassium - in various combinations, is the primary qualification for placement in chapter 31 of the Schedule and that presence, without functional relevance, should not suffice. It is contented that in the impugned goods, none of these three elements are essential to the function. According to Learned Authorized Representative, commercial literature of the respondent, pertinent to the products in question, gives the lie to the finding of the adjudicating authority that the packaging is bereft of any indication of intended use as plant growth regulator . 9. There is no dispute that the three products are micronutrients . It is also clear that micronutrient is not a specific entry in the Schedule. Therein lies the nub: owing to privileged treatment accorded to fertilizers , manufacturers would prefer to classify micronutrients as fertilisers with Revenue preferring to deny them that privilege. The dispute is not about the fitment of the description of the goods over the description in the Schedule and is characterised by culling out aspects of rival descriptions, circulars and judicial decisions to suit the claims on the rate to be adopted. Considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that fertilizers and pharmaceuticals are favoured enough to merit separate chapters on their own, justified by their importance for the human race. At the same time, they, being chemicals, are ensconced in section VI of the Schedule to the Central Excise Tariff Act, 1985, i.e. PRODUCTS OF CHEMICAL AND ALLIED INDUSTRIES reflecting strict adherence to the arrangement of goods in the Schedule. The section, commencing with organic chemicals and inorganic chemicals, recognises that fertilizers and pharmaceuticals may fall under either and acknowledges that they are to be distinguished from their doppelganger in the other two chapters. Though, the Hon ble Supreme Court has held in Commissioner of Central Excise v. Mannampalakkal Rubber Latex Works [2007 (217) ELT 161 (SC)] that, in ascertainment of classification, intended use cannot normally be a determining factor, specific qualification in the particular heading or in the notes to the chapter or section are deviation sanctified by law. Again, as per rule 1 of General Rules for Interpretation of the First Schedule of the Central Excise Tariff Act, 1985, though titles of sections or chapters have no legal standing, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivilege due to fertilizers. According to him, this was the very error that the adjudicating authority was led into. It was further contended that this exclusion could not have been overcome, as the adjudicating authority did, by retaining an incorrect classification even where the alternative proposed was not in compliance with the General Rules for Interpretation of the First Schedule of the Central Excise Tariff Act, 1985. The adjudicating authority, after considering the allegations in the show cause notice against acceptance of the declared classification and the finding of non-applicability of the proposed classification, did resort to rule 4 of General Rules for Interpretation of the First Schedule of the Central Excise Tariff Act, 1985, viz., Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are akin. 15. We are unable to approve of the proposition made on behalf of Revenue that the classification claimed should have been rejected. Rejection of a claimed classification is not an end in itself as duty liability can be computed only after application of the rate legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for the circular requires such goods, as are found to be separate chemically defined compounds, to be classified under chapter 28 or 29 as organic or inorganic chemicals. Obviously, it does not envisage the classification now espoused by Learned Authorized Representative. 17. Learned Authorized Representative and Learned Senior Counsel invited our attention to circular no. 1022/10/2016-CX dated 6th April 2016 which, having rescinded all the above referred circulars, went on to instruct field authorities to classify micronutrients as other fertilizers only if the three macronutrients are essential to the goods and to classify under chapter 28 or 29 if these were separate chemically defined compounds ; it is abundantly clear that these are not plant growth regulators . There are inconsistencies, however, in this sample of distilled wisdom. Highlighting the extending of concessional rate of duty for micronutrients under chapter 28, 29 and 38 that are also covered by Fertilizer (Control) Order, 1985, there is an explicit denial of relevance to the said order in determining classification. This is contrary to the law laid down by the Hon ble High Court of Calcutta in Naf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Customs. According to Learned Authorized Representative, the Hon ble Supreme Court in Commissioner of Central Excise v. Karnataka Agro Chemicals [2008 (227) ELT 12 (SC)], had accorded a finality to the dispute by holding that micronutrients , which do not contain any one of the three macronutrients, was liable to duty as plant growth regulators and that the remand to original authority was merely to ascertain the threshold of presence of macronutrients for qualification as essential. Learned Senior Counsel urged us to follow the decision of Hyderabad bench of the Tribunal in Commissioner of Central Excise Service Tax, Hyderabad-IV v. Aries Agrovet Industries Ltd [Final order no.30767-30768/2017 dated 19th June 2017] confirming the very same goods under heading 3105 of the First Schedule to the Central Excise Tariff Act, 1985. We find ourselves unable to agree with the far-fetched proposition of Learned Authorized Representative; the decision of the Hon ble Supreme Court in re Karnataka Agro Chemicals Ltd, by remanding the matter for a decision on the extent to which composition of micronutrient would determine essentiality to the metal, has concurred with the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by use as reflected in Fertilizer (Control) Order, 1985 and the deficiency that is sought to be remedied by their addition to the soil or by foliage application. The chelated metal that is designated as micronutrient requires nitrogen to be such. The test results relied upon by Learned Authorized Representative is not conclusive on the absence of nitrogen and, from the contents of the report, it would appear that the test was limited to ascertainment of conformity with declaration of ingredients on the product itself. That may explain the want of the test memo and test report in the appeal filed by Revenue. Notwithstanding the argument of Learned Authorized Representative that the decision of the Tribunal in the respondent s own case at Hyderabad, which for want of benefit of the decision of the Hon ble Supreme Court is not good law, considering the extent of finality in the said judgement noted supra by us and our finding on the existence, nay, essentiality of nitrogen in any micronutrient , we cannot but be in agreement with the Hyderabad bench. 21. The circular of Central Board of Excise Customs issued in 2016 has discarded the earlier advice to classify micronutrients ..... X X X X Extracts X X X X X X X X Extracts X X X X
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