Customs, Excise and Gold Tribunal - Bangalore
The Commissioner Of Central Excise And ... vs Chemcel Bio-Tech Ltd. on 7 February, 2007
Equivalent citations: 2007(117)ECC395, 2007ECR395(TRI.-BANGALORE), 2007(211)ELT414(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. This is a revenue appeal arising from Order-in-Appeal No. 38/2006 dated 20.3.2006 by which the Commissioner (A) has set aside the Order-in-Original No. 17/2005 dated 20.10.2005 passed by the Additional Commissioner confirming demands holding that the appellant's products are not plant growth promoter carrying on nil rate of duty. The Commissioner (A) after detailed examination of the matter including the Apex Court's decision upheld the assessee's contention that the item produced by them was plant growth promoter falling under chapter heading 31.01.00. In this regard, he has relied on technical information found in the Book on Plant Physiology 4th Edition by Robert M. Devlin and Francis H. Witham. He has also referred to the definition of the terms found in the book of J.C. Johnson's. He has also considered the HSN Explanatory Notes besides the Chemical Examiner's report. The findings given by the Commissioner (A) in Para 5 is reproduced herein below.
5. I have carefully gone through the case records and the submissions made by the appellants, including those urged at the time of personal hearing. It is found that the appellant's product contained nutrients which were characteristic of fertilizers, but a plant growth regulator could not have any nutrient in it. As per scientific literature on the subject it is emphasized that plant growth regulators were organic compounds other than nutrients, which in relatively small amounts could inhibit, promote or alter I modify physiological processes in plains. A plant growth promoter will only promote growth of the plant and will not inhibit it. On the other hand, a plant growth regulator can inhibit, promote or otherwise alter physiological processes in plants. Plant physiology (4th edition) by Robert M. Devlin & Francis H. Witham gives the following description:
Plant regulators are organic compounds other than nutrients that in small amounts promote, inhibit or otherwise modify a physiological process in plants.
J.C. Johnson's "Plant growth regulators and Herbicide Antagonists - Recent Advances" introduces Plant Growth Regulators as under:
Plant growth regulators are compounds, mainly organic, other than nutrients which in relatively small amounts inhibit, promote or otherwise alter physiological plant processes. Therefore, it transpires that Plant Growth Regulators are natural or synthetic organic compounds other than nutrients and that when applied in small amounts, they can alter physiological process in plants. All the above literatures cited seem to be converging on the point covered by the HSN Note. They indicate that PGRS are natural or synthetic organic compounds other than nutrients and that, when applied in small amounts, they can alter physiological processes in plants. In the instant case, the adjudicating authority had no case that "Cheminocel" could inhibit or otherwise modify (apart from promoting) plant processes. The appellant's plea that the product contained only amino acids and other nutrients and therefore, only promoted plant growth has not been successfully dislodged in the Additional Commissioner's order. The appellant's product 'Cheminocel' and other such products contained nutrients and only promoted plant growth, which was a function squarely attributable to fertilizers. The HSN explanatory notes, which also said that plant growth regulators were intended to inhibit or promote physiological processes in plants. Nutrients and amino acids present in "Cheminocel" promoted growth of the plant as a whole and did not play any restrictive role like a plant growth regulator. Further, it can not he argued that the fertilizer should he applied directly to the soil so as to increase its fertility and 'Cheminocel' liquid which was used for spray over the plant foliage could not he considered as a fertilizer. Any substance which contained amino acids (as a source of nitrogen to plants) could only be classified as fertilizers. "Cheminocel" was rich in amino acids and hence classifiable only as a fertilizer. The appellants also stated that "Cheminocer" was a biologically derived plant growth promoter containing certain natural trace elements as well as precursors, enzymes and hydrolysed protein complexes. From the literature and other evidence on record, it is clear that the appellant's product is only a bio-fertilizer capable of promoting plant growth by providing nutritional support. The literature and labels of the product shows its salient features as increases crop growth through plant metabolic activity; increases uptake of micro nutrients: helps and accelerates photosynthesis; activates and induces flowering and fruitset related harmones; and its natural stimulant properties promotes enzymic activity". Further, the Hon'ble Supreme Court decision in the case of Ranadey Micronutrients v. CCE . held that "micro-nutrients were appropriately classifiable under Chapter 31 of the Central Excise Tariff Schedule. The appellants' products also contained micro-nutrients and hence the same should be classified only under Chapter 31. I have seen the chemical report furnished by the Joint Director of Central Revenue Laboratory. Customs House, Chennai vide letter L. Cx. S.29/77/2004 dated 30.11.2004. The report reads as "it is seen from literature forwarded that cheminocel SP is composed of mixture of Amino Acids. The salient features of the sample as stated on the packing are, (i) increased crop growth through plant metabolic activity; (ii) increases uptake of micro nutrients; (iii) helps and accelerates photosynthesis: (iv) activates and induces flowering and fruit set related hormones: and (v) its natural stimulant properties promotes enzymatic activity. In view of the above, the sample may be considered to be composed of mixture of Amino Acids used for application on plants. Cheminocel GR, it is seen from the literature forwarded that cheminocel GR is made of mud and mixture of Amino Acids. It is stated to ensure high quality yields, optimum growth of root system of plants, uniform plant growth etc. Both the samples are suited to be used for activating the plant growth and help higher yields. However, its actual use may be ascertained. NB: If felt necessary, expert opinion from Agricultural Institution may be obtained regarding the classification of the samples". I have also verified the letter No. PP.11 (1) 9/2000 dated 24.02.2001, issued by the Commissioner & Director of Agriculture. Government of Andhra Pradesh, stating the product viz. Amino Acids (Hydrolised protein mix.) is bio-product/ growth stimulants. This communication was based on the approval by a High Level Technical Committee of the Government of Andhra Pradesh State. Further, I have also verified the report submitted by International Institute of Biotechnology and Toxicology (IIBAT). Kancheepuram, Tamilnadu vide their letter IBAT/PBK/2005 dated July 27, 2005. The report reads "Hydrolised Proteins Mixture (Mixture of Amino Acids - Soluble Powder, Hydrolised Proteins Mixture (Mixture of Amino Acids) Granules and Hydrolised Proteins Mixture (Mixture of Amino Acids) - Soluble Liquid. We have analysed the contents of the above 3 samples. Based on this, we furnish the following for your kind perusal. The referred samples are a protein hydrolysate, of vegetable /plant origin. In the past we conducted experiments on agricultural crops at our farm to test protein hydrolysate for drawing efficacy; phytotoxicity and compatibility and also we tested them for toxicity in mammalian species. Our field crop efficacy studies have unequivocally demonstrated that the said protein hydrolysates when applied at foliar sprays can enhance the growth of the crops thus realizing statistically higher yields. Perhaps, the reason for this could be the increased nitrogen source, acting like fertilizer. Hence, we believe that protein hydrolysate of the above nature are not to be classified as plant growth regulators, since plant growth regulators may sometimes selectively inhibit the growth of certain part/portion of a plant. In comparison, protein hydrolysate always enhance/increase/promote/stimulate growth of a plant. On careful study of the certificates and reports as above, I have drawn a conclusion that the impugned products manufactured by the appellants are plant growth promoters and not plant growth regulators. In the instant case, the products manufactured by the appellants are bio-fertilisers, which helps plants growth and higher yield, but in no way retard/restrict the growth of the plants. I agree with the contentions of the appellants that the impugned products can rightly be classified under Chapter 31.01. Therefore, the demand raised in show cause notice and confirmed vide the impugned order is not sustainable. In view of the above, I pass the following order.
ORDER The Order in Original No. 17/2005 dated 20.10.2005 passed by the Additional Commissioner, Customs and Central Excise, Guntur is set aside. The appeal filed by M/s. Chemcel Bio-Tech Limited, Autonagar; Vijayawada is allowed.
2. Revenue has attempted to distinguish the Supreme Court's judgment relied by the Commissioner (A) in the case of Ranadey Micronutrients v. CCE as noted in the order. It is submitted that the assessee did not produce literature of the products nor any reports of the Chemical Examiner to prove their contention that the product contents nutrients, therefore, they attempt to distinguish the Apex Court judgment. The other judgments referred to by the Commissioner (A) are also being attempting to distinguish in the grounds of appeal. In the grounds of the appeal, it is the contention of the revenue that the item is a plant growth regulator and to be classified under specific Chapter Heading 38.08. 20.
3. We have heard the learned JDR who argued in extenso and also learned Counsel.
4. We have carefully perused the findings extracted above and the entire set of paper-book produced by the learned Counsel to substantiate their plea with evidence that the item in question is only a plant growth promoter and not plant growth regulator. The revenue has not controverted the evidence produced by them which includes the opinions obtained by the appellants from Commissioner and Director of Agriculture, Department of Agriculture, Government of Andhra Pradesh including the report of International Institute of Biotechnology and Toxicology, Kancheepuram. The entire technical literature supporting their plea was produced before the Commissioner (A) and the Commissioner (A) was satisfied with the evidence produced including the Chemical Examiner's report to uphold the plea that the item is a plant growth promoter and not plant growth regulator. The revenue is only attempting to distinguish the judgments without producing any rebuttal evidence. In absence of any rebuttal evidence, the prayer made by the revenue to distinguish the judgments cited by the Commissioner (A) is not possible. We do not find any merit in this appeal. The impugned order is correct in law. There is no merit in this appeal and the same is rejected.
(Pronounced and dictated in open Court)