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TMI Blog2008 (10) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... microbes were biofungicides biopesticides, correctly classifiable under CSH 3808 10 of the Central Excise Tariff. The original authority found that the impugned products did not contain any chemicals and they did not kill any pests directly. After examining the manner in which the microbes worked on insects and pests, he found that the microbes were live cultures of fungi or bacteria basically used for the, purpose of plant growth through biocontrol of insects and pests. Many organisms survived in nature by feeding on insects, parasites and pests. The microbes were used to control and manage pest population. This was biocontrol. Therefore the microbes were not pesticides/insecticides/fungicides of CH 3808 of the Central Excise Tariff (tariff). He also relied on F.O. No. 1837-1841/2005 dated 25-10-05 of the Bangalore Bench of the tribunal in arriving at the finding that the impugned microbes were cultures of micro-organisms which aided growth of plants and were rightly classifiable under CH 3002 of the tariff. Accordingly, vide Orders-in-Original No. 5/07 (ADC) dated 23-3-07 and No. 6/07 (ADC) dated 26-3-07, the original authority dropped the proposals to classify the microbes under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices issued for the subsequent period, the original authority dropped the proposal to classify the microbes under CH 3808. 5. The impugned products and their process of manufacture were furnished by Stanes as follows: • Bio-Cure (F) is based on fungal spores in a medium (culture based on the fungal spores), namely, Trichoderma viridie, Trichoderma hamaturn and Trichoderma harzianum. These living microbial cultures are prepared in a solid medium like tapioca powder, maize powder or oats powder, where these fungal produces spores (seeds) of the respective fungus which is allowed to multiply by natural growth. Then these microbial spores are collected by scraping the medium in a sterilized environment and impregnated into another carrier medium, which is made up of decomposed tapioca and maize powder with kaolinic clay. Such impregnated microbial spores are packed and sold in retail. These spores per se cannot kill any fungus directly as opposed to chemical pesticides. • Bio-Cure (B) is a bacterial culture based on the bacteria, namely, Pseudomonas flourescens and Bacillus subtilis. These microbial cultures are mixed in solid carrier medium which is made up of decomposed tapioca a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uticles and created a pathogenic disease symptoms to the cells of such insects causing starvation to the cells and consequential extinction. 6.2 Under CSH 3002 90 30 of the tariff there was a specific entry which included "cultures of micro-organisms (excluding yeast)". In HSN explanatory note under CH 3002, it was mentioned that cultures of micro under CH 3002 would include cultures of micro for technical purposes. (eg.: for aiding plant growth). As per the test report of the Department of Agricultural Microbiology, TNAU, the impugned goods were used for biocontrol of disease in crops. It showed that the impugned goods had inherent medicinal characteristics such as therapeutic property of controlling the diseases. The Chapter Heading 30 dealt with medicaments. Therefore, Chapter Heading 3002 was apt for the products and not 3008.10 as held in the impugned orders. 6.3 CH 3808 canvassed by the Revenue covered insecticides, rodenticides, fungicides etc. As per explanatory notes of the HSN under Chapter Heading 3808, it was clearly mentioned that the heading covered a range of products other than those having the character of medicines. The impugned goods had prophylactic values as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (A) had travelled beyond original direction given in the remand order by the Commissioner (A) by browsing the internet and using the information to arrive at, the impugned findings. The website advertised the product which was for consumption by customers such as farmers. This information could not be relied upon to determine the classification. In Blue Star Ltd. v. UOI & another [1980 (6) E.L.T. (280) (Bom.)], the Hon'ble High Court of Bombay observed thus "In any event what the petitioner may advertise by way of attracting customers can be no criterion for adjudicating upon the issue whether the duty is payable under a particular tariff item. In other words payment of duty under a particular tariff item must depend upon the facts of the case and not on the advertisement gimmick of the advertiser." Moreover, the packing cartons carried an unambiguous representation as cultures of microorganisms. Further, the cartons also carried a message "To protect your crop from fungal diseases". 7. In the revenue appeals, it is claimed that the assessee always cleared the goods on the basis that no duty was payable. Therefore, it could not be argued that the sale price included duty an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and Bio-Power. These are cultures of microbes (bacteria and fungi) prepared and sold on carriers such as tapioca powder and oats. Department had initially sought to classify them as fertilizer under CH 3101. The original authority decided them to be not fertilizer as the entry CH 3101 covered only chemical fertilizers. These preparations had no chemicals present in them. Vide Order-in-Appeal No. 40/25 dated 28-2-05 passed in appeal against the above order, Commissioner (A) had observed as under: "It is seen that in the appellant's case, the end products were in fact spores of fungus and was removed as carrier based microbes. Whether it is for plant growth is a moot point, which could be decided only knowing characteristics from the biological examination, as directed above. The lower authority shall also consider the above point raised with regard to classification under 30.02 while deciding the matter afresh." He remanded the case to decide whether the microbes were fertilizer, fungicide or goods of CH 3002. Following the remand, the Additional Commissioner examined the classification in the light of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erapeutic, prophylactic or diagnostic uses 3002 90 30 -- Cultures of micro-organisms (excluding yeast) HSN Explanatory notes to Chapter 3002 clarifies that the heading includes 'cultures of micro for technical purposes (eg. for aiding plant growth). 'Whether the microbes aided plant growth was a biological question, the Commissioner (Appeals) had left to the original authority when he had passed the Order-in-Appeal No. 40/05 dated 28-2-05. This is answered in the affirmative by the original authority. We note that his finding is correct. It is significant that the note on coverage of microbes under CH 3002 does not restrict it to those that serve as fertilizers but broadly to those that aid plant growth. Experts consulted certified that microbes treated diseases in the plants. In any case microbes being cultures of micro are covered by CH 3002. 10.3 In NMA Babu v. CCE, Bangalore [2006 (198) E.L.T. 528 (Tri.-Bang.)] cited by the assessee, the Tribunal had considered classification of Echoderma, a product that helped control pests by depleting nutrients necessary for harmful bacteria to survive at the roots of the plant. The Tribunal observed that Echoderma was a beneficial fast ..... X X X X Extracts X X X X X X X X Extracts X X X X
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