The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad held that micronutrients manufactured for plant growth not plant growth promoters under Central Excise Tariff Act, 1985.
The appellant, KPR Fertilizers Ltd manufactures micronutrients for plants and has classified them under Chapter heading 3105 of Central Excise Tariff Act, 1985. A show cause notice dated 14.03.2011 was issued to the appellant covering the period 2007-08 to 20010-11 proposing to classify the micronutrients manufactured by the appellant as plant growth regulators under Chapter heading 38089304 of Schedule to the Central Excise Tariff Act and consequently recover the differential duty of Rs.1,23,49,088/- under proviso to section 11A(1) of Central Excise Act along with interest under section 11AB.
It was further proposed to impose a penalty on them under section 11AC and under Rule 25 of the Central Excise Rules, 2002. The appellant contested the proposal before the Commissioner both on merits and on limitation. After following due process, learned Commissioner has passed the impugned order. Hence, the appeal has been preferred.
Macronutrients, micronutrients and plant growth regulators are three distinct known to agricultural experts, as known in the market and as clarified by the CBEC. The show cause notice proposed to classify the micronutrients manufactured by the appellant as plant growth regulators.
The Bench consisting of Anil Choudhary, Judicial Member and P Venkata Subba Rao, Technical Member held that “We find nothing in the Chapter note 6 to Chapter 31 which says that Nitrogen, Phosphorous and Potassium cannot be part of chelating agents or the chelating agents are not essential ingredients. We do not find any reason to go merely by the assertion of the learned Authorized Representative in this regard. Since one of these elements is available, the classification of the goods under Chapter heading 3105 is clearly sustainable. The alternative classification as plant growth regulators is not sustainable.”
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