1993(06)LCX0023
IN THE CEGAT, SPECIAL BENCH `C’, NEW DELHI
S/Shri G.P. Agarwal, Member (J) and S.D. Mohile, Member (T)
RANADEY MICRONUTRIENTS PVT. LTD.
Versus
COLLECTOR OF C. EXCISE, PUNE
Order No. 179/93-C, dated 1-6-1993 in Appeal Nos. E/725 & 726/91-C
CASE CITED
Padimini Products v. Collector — 1989(08)LCX0031 Eq 1989 (043) ELT 0195 (SC) [Para 11]
Advocated By : Shri C.M. Korde, Advocate, for the Appellants.
Smt. Ananya Ray, SDR, for the Respondent.
[Order per : S.D. Mohile, Member (T)]. - The two appeals have been filed against a common Order-in-Original dated 4-11-1990 and have a common issue and being heard together. The present appeals are also being disposed of by a common order.
2. The issue involved is whether micronutrients manufactured and cleared by the two appellants, consisting of mixtures of sulphates of Fe, Cu, Zn, Mn, Mo, B were classifiable as plant growth regulators under Heading 3808.90 as claimed by the department, or as fertilisers (which were exempted) as contended by the appellants.
3. In support of their contention the appellants have relied upon various decisions under the old tariff to show that these micronutrients were regarded by the department as well as by the trade as fertilisers. It was also pointed out that as per the test report of the Dy. Chief Chemist such micronutrients were not plant growth regulators.
4. It was, however, stated that such micronutrients did not include NPK and were. therefore, excluded from the scope of fertilisers for the purpose of New Central Excise Tariff vide the relevant Chapter note in respect of the heading fertilisers. It has been claimed that all other entries besides plant growth regulator, such as, pesticides, insecticides etc. inhibited the growth of undesirable things like weeds, pests etc. whereas the micronutrients prmopted the growth of plants and so these could not be regarded as plant growth regulator as understood in the trade.
It was also claimed that there was no suppression or mis-declaration etc. so as to either invoke the longer period beyond six months from the date of show cause notice or to impose the penalty.
5. Smt. Ananya Ray, learned SDR opposed the contentions of the appellants. She claimed that all the citations in support of the appellants’ claim that micronutrients were regarded as fertilisers were under the old tariff and under the new tariff, by a specific provision of Chapter Note 6, the term `Other fertilisers’ applies only to products containing at least one of the fertilising elements namely, Nitrogen (N), Phosphorous (P) or Pottassium (K).
6. As regards the Dy. Chief Chemist’s report that the micronutrients were not `plant growth regulator, she claimed that the Dy. Chief Chemist’s role was only to give chemical composition and not to give opinion of classification of the product. She added that as per the explanatory notes to HSN the products which permitted the growth of the plants were also included under the category of plant growth regulators.
7. Considered. The contention of the appellants that the Micronutrients are regarded in the trade as fertilisers and hence this classification should be preferred over in other classification as also held by the department in the past is not tenable because the criterion of trade parlance will only apply subject to the tariff definition. In this case w.e.f. 1-3-1986 when the new Central Excise Tariff was introduced, the Chapter Note 6 made it very clear that term `other fertilisers’ will only include those which contain at least one of the major nutrients, namely, N, P or K. which condition was not fulfilled in the case of micronutrients. Moreover, in terms of the rules of interpretation specific category has to prevail over a more general heading. Hence, if the term `plant growth regulators’ is found to cover micronutrients then that heading being more specific will prevail over the more general heading fertilisers. As seen from the explanatory notes to HSN on which the Central Excise Tariff is based and which can therefore, be relied upon in absence of any contrary indicatory factors; plant growth regulators’ are applied to alter the life process of plant so as to enhance yield, improve quality or facilitate harvesting etc. Micronutrients are admittedly used albeit in trace quantities to accelerate the growth and enhance the yield and hence these would be covered by “plant growth regulators.”
8. As seen from the Kirk-Othmer Encyclopedia of Chemical Technology - Third Edition “The use of plant growth regulators may be the cause of the most important quantitative yields yet achieved in agriculture. The principal aim of the agrochemical industry has been to provide chemicals that control the competition to the crop, i.e. the weeds, insects, fungi and nematodes that reduce yield or quality or that interfere with harvesting.” This is only the principal aim and not the only aim of plant growth regulator. As seen further from the heading plant growth substances `plant growth substances or regulators are used to modify the crop “and further,” plant growth regulators other than nutrients usually are organic compounds’. Thus nutrients are also covered under the term plant growth regulators. The scope of the term “nutrients” in the said quotation obviously includes, viz. regulation of competition to the main crop, refers to micronutrients since major nutrients like N, P and K are covered under the scope of the term `fertilisers’ as had been contended by the appellants in support of their claim that micronutrients were also fertilisers.
9. They had claimed that certain nutrients like N, P, K are required by the plant in large quantities and are traditionally known as fertilisers. Others are required in smaller quantities, and the treace elements like Fe, Cu, Zn, Mn, Mo etc. are required only in very small quantities and are called as micronutrients.
10. It is thus seen that though in a generic sense micronutrients may also be a kind of fertilisers but for the purpose of Central Excise Tariff they would be excluded from the scope of Chapter 31 (Fertilisers) by virtue of Chapter Note 6 which requires that the term `other fertilisers’ would only include those products used as fertilisers and containing as essential constituent at least one of the fertilising elements, Nitrogen, Phosphorous or Potassium which is not the case in respect of micronutrients. It is not appellants’ case nor any material has been produced to show that the micronutrients are covered by any other specified fertilisers under Chapter 31.
11. As against this, as seen from the Explanatory Notes to HSN Chapter 38, (Miscellaneous Chemical Products.) the products such as micronutrients which accelerate the growth of plants or enhance the yield are also covered by the term plant growth regulators as also seen from the relevant extracts relating to plant growth substances/regulators from Kirk-Othmer referred to above. Hence, on merits the claim of the Department to classify micronutrients as plant growth regulators under Heading 38.08 is well merited. However, as seen from the show cause notice and the amendments made from time to time and from the Trade Notice referred to in the Order-in-Original there was a lot of doubt regarding the scope of the term micronutrients which had been held as fertilisers under the old tariff for a long time,—in view of the various decisions cited on behalf of appellants. Hence, the burden of changing the classification under the new tariff was on the department. The Apex Court decision in the case of Padmini Products v. Collector of Central Excise - 1989(08)LCX0031 Eq 1989 (043) ELT 0195 (SC) laying down that mere non-declaration is not sufficient to invoke the longer period but some more positive act is required would apply fully to the facts of the present case. Hence, there is no warrant to invoke longer period beyond six months from the date of show cause notice or to impose any penalty on the appellants. The penalty imposed by the Order-in-Original is, therefore, set aside and so is the demand beyond the period of six months from the date of show cause notice. The Order-in-Original is modified to the above extent and appeals are partially allowed to the extent indicated above.
Equivalent 1995 (75) ELT 139 (Tribunal)