TMI Blog2022 (12) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Act, 1944 appears to have been observed in its breach and must be remedied. To enable that, we set aside the impugned order and remand the matter back to the original authority for subjecting the statement of Mr Sanjay Shembekar, considered to be of particular relevance in determining the outcome of the impugned order, to the prescriptive mandate of section 9D of Central Excise Act, 1944. Needless to say, the adjudicating authority shall afford the appellant herein sufficient opportunity, in accordance with the principles of natural justice, to rebut the contents of the show cause notice both by submission as well as through documents. Appeal allowed by way of remand. - EXCISE APPEAL NO: 87127 OF 2018 - FINAL ORDER NO: A / 86244/2022 - Dated:- 22-12-2022 - MR C J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) Shri Abhishek Bhoot, Advocate for the appellant Shri S Anantha Krishnan, Commissioner (AR) for the respondent ORDER In this appeal of M/s Dharti Agro Chemicals Pvt Ltd the issue in dispute is the classification of forty items manufactured and cleared by appellant of which thirty one were held to conform to descriptions correspon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced on the decision of the Tribunal in Commissioner of Central Excise, Mumbai III v. Johnson Johnson Ltd [2010 (252) ELT 369 (Tri.-Mumbai)] and on the decision of the Hon ble Supreme Court in Commissioner of Central Excise v. Wockhardt Life Sciences Ltd [2012 (277) ELT 299 (SC) which held that 30. There is no fixed test for classification of a taxable commodity. This us probably the reason why the common parlance test or the commercial usage test are the most common [see A. Nagaraju Bors. v. State of A.P., 1994 Supp (3) SCC 122 = 1994 (72) ELT 801 (SC)]. Whether a particular article will fall within a particular Tariff heading or not has to be decided on the bases of the tangible material or evidence to determine how such as article in understood in common parlance or in commercial world or in trade circle or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intension, when the statute was enacted [see D.C.M. v. State of Rajasthan, 1980 (4) SCC 71 = 1980 (6) E.L.T. 383 (S.C.)]. One of the essential factors for determining whether a product fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = 1990 (47) E.L.T. 161 (S.C.); Commissioner of Customs v. G.C. Jain, 2011 (12) SCC 713 = 2011 (269) E.L.T. 307 (S.C.)]. A residuary entry can be taken refuge of only in the absence of a specific entry; that is to say, the latter will always prevail over the former [see C.C.E. v Jayant Oil Mills, 1989 (3) SCC 343 = 1989 (40) E.L.T. 287 (S.C.); H.P.L. Chemicals v. C.C.E, 2006 (5) SCC 208 = 2006 (197) E.L.T. 324 (S.C.); Western India Plywoods v. Collector of Customs, 2005 (12) SCC 731 = 2005 (188) E.L.T. 365 (S.C.); C.C.E. v. Carrier Aircon, 2006 (5) SCC 596 = 2006 (199) E.L.T. 577 (S.C.)]. In C.C.E. v. Carrier Aircon, 2006 (5) SCC 596 = 2006 (199) E.L.T. 577 (S.C.), this Court held : 14.....There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification, the relevant factors inter alia are statutory fiscal entry, the basis character, function and use of the goods. When a commodity fall within a tariff entry by virtue of the purpose for which it is put to (sic. produced), the end use to which the product is put to, cannot determine the classification of that product. 34. In our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the matter is restored to the file of CESTAT for fresh decision on merits. to contest the validity of the supposition that statement of employee is sacrosanct. 5. According to Learned Authorised Representative, the Hon ble High Court of Bombay, in disposing off the writ petition of the appellant herein, had directed that expert opinion be solicited and inherent in reliance on the statement of the employee is the mandate to the adjudicating authority. He further contends that the impugned goods contain only trace of the fertilizer elements, nitrogen, phosphorous or potassium, which renders those to be plant growth regulator/plant growth promoters/ micro nutrients as evident from the statement of their own employee. He further contended that the incorrect classification of the said goods as other fertilisers has been clearly brought out in the impugned order. 6. The Tribunal, in several decisions relating to similar disputes on classification, has consistently held that the presence of nitrogen, phosphorous or potassium, notwithstanding the significance as content but intended for agriculture and horticulture, suffices for it to be fertiliser assigned a special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man ingenuity. The range, and the limitation thereof, necessitates certain rules for fitment that have evolved by consensus. 13. On examination of the Schedule, we 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontend that the impugned goods are separately defined compounds and, not being fertilizer , in the absence of nitrogen, phosphorous or potassium, must not be accorded the privilege 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if not, to be subjected to ascertainment of the presence of the primary elements, before allowing classification as other fertilizers. Even here, the confusion is palpable 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer on the basis of the circular of 1994, the Hon ble Supreme Court was called upon to adjudge on the propriety of disowning of a circular by the Central Board of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding on the scope of exclusion of separate chemically defined compounds supra. 20. Micronutrients manufactured in factories are, in our opinion, fertilizers , both 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and precedent judgements, save the decision of the Tribunal in the dispute of the respondent themselves, have not examined the classification and scope of heading 3105 of First Schedule of Central Excise Tariff Act, 1985. iv. 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 negligibility of the quantity. Classification under heading 3105 claimed by the manufacturer cannot be denied to them. in the decision of the Tribunal in Commissioner of Central Excise, Mumbai I v. Aries Agro-Vet Industries Ltd [2018 SCC OnLine CESTAT 5885]. The only issue that remains for consideration is the presence of fertilizing element as explained in the decision in re Aries Agro-Vet Industries Ltd. 8. It is seen from the test report there is no doubt about the presence of the said fertilizing elements in the impugned goods. Though it is the contention on behalf of Revenue that the statement of the employee is clear enough evidence that presence is questionable which, according to Learned Senior Counsel, required that the statement of the said e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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