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TMI Blog2024 (11) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... namely PI Industries. The appellant cleared the goods by classifying the same under heading 3101 0099 claiming nil rate of excise duty in ER-1 Returns. However, by mistake they declared the Central Excise heading as 3105 of Central Excise Tariff in the months of June, August, September 2014 and Central Excise Heading 3808 for the month of July 2015. On realising this mistake of wrong headings the appellant vide letter dated 20.03.2017 informed the jurisdictional Central Excise Authorities about the correct classification of Biovita under heading 3101 of the Central Excise Tariff. A show cause notice dated 01.07.2017 was issued seeking to classify the goods under heading 3808 of the Central Excise Tariff classifying the goods as Plant Growth Regulator and consequently differential central excise duty was demanded along with interest. There was also a suggestion of imposing penalty under Section 11AC of Central Excise Act and Rule 25 of Central Excise Rules, 2002. Both the lower authorities upheld the demand and rejected the classification claimed by the appellant. Consequently this appeal has been filed before Tribunal. 2.1 Learned counsel for appellant pointed out that M/s PI Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "biostimulant" means a substance or microorganism or a combination of both whose primary function when applied to plants, seeds or rhizosphere is to stimulate physiological processes in plants and to enhance its nutrient uptake, growth, yield, nutrition efficiency, crop quality and tolerance to stress, regardless of its nutrient content, but does not include pesticides or plant growth regulators which are regulated under the Insecticide Act, 1968 (46 of 1968);" .. "(h) "Fertiliser" means any essential substance, either in straight or mixed form and derived from either inorganic, organic or mixed sources, that is used or intended to be used to provide essential plant nutrients or beneficial elements or both for the soil or for the crop or makes essential plant nutrients available to the plants either directly or by biological process or by both in the soil or plant as notified from time to time by Central Government and specified in the schedules appended to this order or as may be notified by the State Governments and includes a biostimulant and nano fertiliser. Explanation. For the purpose of Fertiliser, - (i) the essential plant nutrients" include Primary Nutrients (Nitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that the appellants had in the month of July 2015 themselves classified the goods under Central Excise Tariff Heading 3808 and in the months of June, August, September-2015 classified the product under Central Excise Tariff Heading 3105 as per directions of M/s PI Industries, the principal manufacturer. It is noticed that subsequent to the impugned order, the issue regarding classification of goods between Chapter 31 and Chapter 38 was referred to the Larger Bench in the case of PI Industries (the Principal Manufacturer itself). Detailed order has been passed by Larger Bench of Tribunal in appeal no. 10081 of 2013 vide Final Order No. 25-30/2024. In the said order, different aspects of the issue have been examined. The said clarity was not available before the lower authorities. The issue involves practically same principles and same chapters. Following are some excerpts from the said decision of Larger Bench. "TARIFF ENTRIES 28. Having examined the aforesaid two products Siapton 10L and Isabion, it would be appropriate to now refer to the relevant tariff entries contained in Chapter 31 of the First Schedule to the Excise Tariff dealing with "fertilizers" and the relevant en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard by the Division Bench the product was directly sprayed on plants/trees. 33. The issue, therefore, that would arise for consideration is whether the mode of usage of the product through soil or foliar application is a determinative test for classifying the goods under ETI 3101 00 99 or ETI 3808 93 43. 34. ETI 3101 00 99 and ETI 3808 93 40, when read with the relevant section and Chapter Notes and the HSN Explanatory Notes, do not provide a distinction based on the mode of usage of such elements. It needs to be noted that water-soluble fertilizers are used for soil and foliar applications. 35. In this connection, it would be pertinent to refer to Unit 5: Plant Nutrition and Irrigation of the book "Floriculturist (Open Cultivation)" prescribed for NCERT Class XI. It provides that the fertilizers can be applied in solid form (broadcasting basal application and top dressing) and liquid form (foliar application and fertigation). The relevant portions from the book is reproduced below: "Application of fertilisers in solid form It includes the following methods: Broadcasting Basal application Depending on the crop, broadcasting of fertliser is carried out prior to sowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est based on mode of application would not be a correct test. 40. It now needs to be examined whether the two products, namely, Siapton 10L and Isabion are fertilizers or plant growth regulators. 41. P.I. Industries has stated that the product Siapton 10L has amino acids alone. It has clarified that 54% of the product is pure amino acids and the remaining ingredients are peptides and micro-nutrients, which are short chain amino acids. Dr. R. Uma Shankar in his opinion dated 08.01.2013 has confirmed that amino acids and peptides can be regarded as bio-stimulants and should be treated as organic nutrients or organic fertilizers and not as classical plant growth regulators. Isagro SPA, Italy which supplied the product to P.I. Industries has specifically stated that Siapton 10L is a product based on organic nitrogenous compounds (amino acids and peptides) and so should be considered as nitrogen based fertilizer with nitrogen in organic form only, incorporated in amino acids and peptides. It has also stated that Siapton 10L is not a plant growth regulator as it does not modify or control or alter any physiological process. 42. According to Agro Pack, Isabion is an organic plant fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s like nitrogen, phosphorus, and potassium that plants need to grow. They enhance soil fertility and promote plant growth by providing the necessary elements for healthy development. On the other hand, plant growth regulators are chemicals that influence plant growth and development by affecting physiological processes like cell division, elongation, and differentiation. They can regulate plant growth by promoting or inhibiting certain functions such as flowering, fruit setting, and root development. In a nutshell, fertilizers provide essential nutrients for plant growth, while plant growth regulators control specific aspects of plant growth and development. 44. Fertilizers are categorized based on the primary nutrients they provide: (a) Macronutrients: These are required in large quantities by plants and include nitrogen, phosphorus, and potassium. They are essential for plant growth, photosynthesis, and overall health. (b) Micronutrients: These are needed in smaller amounts but are equally crucial for plant growth. Examples include iron, zinc, copper, and manganese. 43. Fertilizers can be organic (derived from natural sources) or inorganic (manufactured chemically). They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and at precise timings to elicit desired responses in plants. They are used to manipulate plant growth processes at critical stages of development. Effects (i) Fertilizers enhance overall plant growth, increase crop yield, improve nutrient uptake, and support healthy plant development. (ii) Plant growth regulators can induce specific responses in plants, such as promoting flowering, delaying senescence, improving fruit quality, or enhancing stress tolerance. 50. The two products, namely, Siapton 10L and Isabion merely provide nutrients to the plant. They do not alter the physiological processes in a desired direction. In other words, the amino acids and the nitrogen present help in cell building exercise, and thereby, help the plant grow using the nutrients (nitrogen, phosphorus and potassium). Therefore, the two products Siapton 10L and Isabion are in the nature of fertilizers (bio-stimulants) and not plant growth regulators. 51. The aforesaid discussion leads to the inevitable conclusion that the Division Bench, while referring the matter to the Larger Bench, was not justified in distinguishing the earlier decision of the Tribunal in Northern Minerals. The two produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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