Custom, Excise & Service Tax Tribunal
Sikko Industries Limited vs Ahmedabad-Ii on 17 February, 2026
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 2
Excise Appeal No. 11754 of 2019-DB
(Arising out of OIA-AHM-EXCUS-002-APP-225-18-19 Dated 13/05/2019 passed by
Commissioner (Appeals) Central Excise, Customs and Service Tax-Ahmedabad-II)
Sikko Industries Limited ........Appellant
193/2 AND 193/2/2 AMBIKA ESTATE SANAND,
VIRAMGAM HIGHWAY AT LYAVA
AHMEDABAD, GUJARAT
VERSUS
C.C.E.-Ahmedabad-II ........Respondent
CUSTOM HOUSE... FIRST FLOOR, OLD HIGH COURT ROAD, NAVRANGPURA, AHMEDABAD, GUJARAT- 380009 APPEARANCE:
Shri Vijay N Nair, Advocate appeared for the Appellant Shri Rajesh K Agarwal, Superintendent (AR) appeared for the Respondent CORAM:
HON'BLE MEMBER (JUDICIAL), Dr. AJAYA KRISHNA VISHVESHA HON'BLE MEMBER (TECHNICAL), MR. SATENDRA VIKRAM SINGH Final Order No. 10097/2026 DATE OF HEARING: 17.10.2025 DATE OF DECISION: 17.02.2026 SATENDRA VIKRAM SINGH M/s Sikko Industries Limited, Ahmedabad (Appellant) were engaged in the manufacture of NPK fertilisers, Organic fertilisers, Seaweed based fertilisers and Soil conditioners. They claimed it's clearance as fertilisers under chapter 31 of the Central Excise Tariff Act, 1985. 1.1 On the basis of search conducted in their factory premises, revenue officials came to know that the appellant has started manufacturing new soil conditioner under brand name "Sikko Fast" and clearing the same as fertilisers by evading Central Excise duty. The department therefore collected clearance data of "Sikko Fast" from the appellant for the period from July, 2014 to June 2017. Alongwith data, appellant also submitted literature of "Sikko fast"
showing the product as granulated soil conditioner. The department took sample of Sikko Fast and sent to CRCL, Vadodara for testing which vide their
2|Page E/11754/2019-DB letter dated 16.02.2017, submitted the report as under, showing characteristics of the product:-
3|Page E/11754/2019-DB 1.2 After recording the statements of Shri Vishal V Mistry Authorised person
of the appellant on 15.09.2017, the department issued a show cause notice dated 16.03.2018 proposing classification of the product under CTH 38249090 and demanding Central Excise duty of Rs. 8,63,543/- under Proviso to Section 11A along with interest under Section 11AA and penalty under Section 11AC of the Central Excise Act,1944 read with rule 25 (1) of the Central Excise Rules, 2002.
1.3 In adjudication proceedings, the Assistant Commissioner vide order dated 19.06.2018, confirmed the charges against the appellant by redetermining classification of the product under CTH 38249090, confirming Central Excise duty demand of Rs. 8,63,543/- along with interest and imposition of penalty of Rs. 7,01,518/- under Section 11AC(1)(c) of the Central Excise Act, 1944. Aggrieved with this order, M/s. Sikko filed appeal before the Commissioner (Appeals) alleging that several of their contentions have not been considered by the Adjudicating authority. They also challenged the test report on the ground that the report was silent on query raised at Sr. No. 3 & 4 which could not be ascertained for want of facility and asked to forward sample to other government laboratories, if required." Learned Commissioner (Appeals) vide impugned order dated 13.05.2019 upheld the order of the lower authority in the light of CBEC circular No. 1022/10/2016- Cx dated 06.04.2016 and rejected the party's appeal. Aggrieved with this order, the appellant filed appeal before the Tribunal.
2. In their appeal, appellant took the following grounds:-
• The Appellate Authority has confirmed the order of the lower authority by relying on note 6 of chapter 31 which states that Nitrogen, Phosphorus, Potassium must be essential component for product to be classified as "other fertilisers" under CTH 3105 whereas, in their case, test report shows presence of 1.1% Nitrogen and 2.1% Potassium which being very low, can not be considered as an essential constituent. The decision of the learned
4|Page E/11754/2019-DB Commissioner (Appeals) is legally not sustainable as note 6 of Chapter 31 speaks of essential constituent and not of dominating constituent. • They manufacture "Sikko Fast" using Natural Dolomite, Natural Bentonite, Natural Rock Phosphate, Gypsum Powder, Suez Manure, City Compost Cow Dung, etc as raw materials. Sum total of ingredients of Nitrogen, Phosphorus & Potassium exceeds 1.5%. As per part B of Schedule-IV of the Fertiliser (Control) Order, 1985, (Annexure K), tolerance limit of organic fertiliser as a sum total of Nitrogen, Phosphorus & Potassium nutrient shall not be less than 1.5% in city compost. Therefore, the product manufactured by them is clearly covered as fertiliser. In their sale invoices, they have declared "Sikko Fast" as soil conditioner which is used as such by the farmers. Soil conditioner is also one kind of fertiliser and therefore, it is correctly classifiable under chapter 31.
• Their product is not Micronutrient referred into CBIC circular dated 06.04.2018. Notion of low presence of three elements is completely baseless and therefore, impugned order is not sustainable.
• The impugned order decides only classification aspect leaving other issues such as invocation of extended period and imposition of penalty undecided. Further, test report relied upon by the department speaks only of the characteristics of the sample and does not reply to queries raised at Sr. No. 3 &4 of the test Memo. The show cause notice as well as order of the lower authorities are silent as to nature of queries raised at Sr. No. 3 & 4 of the test Memo and why the sample was not sent to other government laboratories for complete testing.
• Larger period of limitation is not invokable in their case in view of the decision of CESTAT Chennai in the case of Madras Cement Ltd Vs. Commissioner of Central Excise, Chennai-IV as reported at 2018 (362) ELT 822 which held that in cases of disputes arising out of a difference in interpretation vis-à-vis classification of the new product, there cannot be allegation that appellant had evaded duty by way fraud or mis-
5|Page E/11754/2019-DB interpretation or mis-statement or suppression of fact. For the same reason, they also challenge imposition of penalty under Section 11AC. They rely on the decision of CESTAT Mumbai in the case of JCB India Ltd reported at 2014 (312) ELT 593.
• They also rely on the decision of Hon'ble Supreme Court in the case of Gujarat State Fertilisers Company Vs. CCE reported at 1997 (91) ELT 3 (SC), wherein it was held that fertiliser was a genus which may consist of various species of fertilisers namely chemical fertilisers, soil fertilisers, animal and vegetable fertilisers as seen from description of various types of fertilisers found in chapter 31. In view of the above, they prayed to allow their appeal by setting aside the impugned order. 3 During arguments, learned Counsel explained nature of the product under dispute. He submits that CESTAT Mumbai in the case of Gujarat Agrovet Ltd Vs. Commissioner of CGST reported at (2023) 11 Centax 42 held that for an item to be classified as fertiliser under Chapter 31, presence of anyone or more of the NPK [Nitrogen (N), Phosphorus (P), and Potassium (K)] as essential constituents is a sine qua non. In the case of "Sikko Fast", all three elements viz Nitrogen (1.1%), Phosphorus (2.4%), and Potassium (2.1%) are present. He also challenges invocation of extended period in the show cause notice on the ground that there is no fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the Provisions of the Act or the Rules made there under with intent to evade payment of duty. On this point, he relies on the decision in the case of Kalyan Jewellers India Pvt Ltd Vs. Commissioner of Central Tax, Cochin reported at 2025 (34) Centax 110 (Tri. -Bang.) which has attained finality as the department's appeal against this order has also been dismissed by Hon'ble Supreme Court as reported at 2025 (34) Centax 111 (SC). Learned Counsel further argues that in their own case, in respect of other products such as Sikko Bio Star, Sikko Gold, Sikko Power, Vakil 3D, etc, Ahmedabad Tribunal vide final order No.
6|Page E/11754/2019-DB A/12447-12450/2021 dated 21.10.2021 has remanded the matter to the Adjudicating Authority to decide afresh in the light of decision in the case of Narmada Bio Chem Ltd and Ors. Vs. CCE & ST Vadodara reported at 2019 (7) TMI 459 CESTAT Ahmedabad which was not earlier available to the Adjudicating Authority wherein the issue of soil conditioner has also been dealt with in detail. He prays that this matter may also be remanded to the Adjudicating authority to pass a fresh order after considering their submissions.
4. Learned AR argued that the product "Sikko Fast" does not meet the criteria of note 6 of chapter 31 which states that "for the purposes of heading 3105, the terms 'other fertilisers' applies to products of a kind used as fertilisers and containing, as an essential constituent, at least one of the fertilising elements-Nitrogen, Phosphorus, and Potassium. As per him, presence of 1.1% Nitrogen and 2.1% Potassium is very low and cannot be considered as essential constituent to qualify for classification as "other fertilizers". He therefore justifies classification of the product under Chapter 38 as against chapter heading 3105 claimed by the appellant. 4.1 Learned AR also relies on CBIC Circular No. 1022/10/2016-Cx dated 06.04.2016 wherein it was clarified that sale of micronutrients as "micronutrient fertiliser" would not lead to classification thereof as fertilisers under chapter 31 and that, where the essential constituent giving character to the mixture is one or more of the three elements namely Nitrogen, Phosphorus, and Potassium, the mixture shall be classified under any of the heading of chapter 31, depending upon its composition and on the other hand, where essential character of product is that of mixture of micronutrients/multi- nutrients having predominantly trace element, it shall be classified under CTH 3824 as chemical product not elsewhere specified or included. He thus, justifies classification of "Sikko Fast" under CTH 38249090 and confirmation
7|Page E/11754/2019-DB of central excise duty demand along with interest and penalty as adjudged by the Appellate Commissioner and prays for dismissing the party's appeal.
5. We have heard the rival submissions. We find that the appellant has contested impugned order both on merit as well as on limitation. The order of Commissioner (Appeals) discusses merit of the case to justify redetermination of classification of the product under chapter 38 instead of CTH 3105 claimed by the appellant. This order is however silent on invocation of extended period in this case to demand duty. We find that the show cause notice itself mentions that the fact of manufacturing of Sikko Fast by the appellant came to knowledge of the department on 21.03.2016. They have issued sale invoices and also filed return(s) prescribed by the department indicating that there is considerable force in party's contention. We however find that the learned Commissioner (Appeals) has not given any finding on invocation of extended period. The appellant also challenged test report dated 15.02.2017 of CRCL, Vadodara which according to them, is incomplete as query 3&4 of the test Memo have not been replied by the Lab on the ground of insufficient testing facilities in the Lab. Surprisingly, show cause notice is silent on whether query at Sr. No. 3&4 were essential for determining correct classification of the product and if yes, why sample was not sent to any other government lab for testing. The Appellate Authority has also not discussed these issues and went ahead to decide classification of the product. The department heavily relied on the test report to conclude classification of the product under CTH 38249090 on the ground that Low percentage of Nitrogen, Phosphorus, and Potassium does not make them essential constituent so as to classify as other fertilizers.
5.1 We find that this Tribunal has considered classification of "soil conditioner" in the case of Narmada Bio-chem Pvt Ltd as reported at 2019 (370) ELT 1276 (Tri.-Ahmd.) wherein, certain principles have been enumerated. As per the appellant's submissions, matter relating to
8|Page E/11754/2019-DB classification of some of their other products such as Best Agri Product (BAP), Sikko Bio Star, Sikko Gold, Sikko Power, Vakil-3D, etc. has also been remanded to the lower authority for examining the issue in the light of Tribunal's decision in the case of Narmada Bio-chem Pvt Ltd (cited supra). We therefore deem it fit to remit this matter also to the adjudicating authority with the following directions:-
a) Examine essentiality of queries at Sr. No. 3&4 of the test memo for determining classification of the goods, which have not been replied to, by CRCL, Vadodara?
b) Whether facts in the present case are same/similar to the products whose classification has been considered by this tribunal vide final order No. A/12447-12450/2021 dated 21.10.2021, and if so, same principles need to be applied in this case also, for determination of classification.
c) What is the minimum percentage of NPK which is must for classification under Chapter 3105 as other fertiliser and does test report in this case answer this requirement?
d) The decision in the case of Narmada Bio-chem (cited supra) mentions certificate issued by the Directorate of Agriculture, Gandhinagar which has considered the product "Bio Gold" as fertiliser. Is similar certificate available in this case?
e) In the facts of the case, clear finding on invocation of extended period for demanding duty be given?
5.3. We therefore set aside the impugned order and direct the Learned Commissioner (Appeals) to examine above aspects and decide the matter afresh after following the principles of natural justice, within a period of 6 months from the date of receipt of this order.
9|Page E/11754/2019-DB
6. The appeal is allowed by way of remand.
(Pronounced in the open court on 17.02.2026)
(DR. AJAYA KRISHNA VISHVESHA)
MEMBER ( JUDICIAL )
(SATENDRA VIKRAM SINGH)
MEMBER ( TECHNICAL )
Raksha