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6.4 We find that Revenue has not been able to rebut the contention of the appellants that the products are not applied directly to the plant and are mixed with soil or clay to make them useable. In fact, in para 13 of the impugned order it is mentioned that the impugned products are mixed with soil/clay. 6.5 We also note that Chapter 38 covers the plant growth regulators which are 'separate chemically defined elements or compounds'. The CRCL test report has failed to establish that the product is a separate chemically defined element or compound and the same is not forthcoming from the literature as well."

7. We find that the Assessee-importer imported 'RTZ Mycorrhiza Roots Soluble' powder which acts as a rooting stimulant for plants and classified the same under CTI 3002 9030. The Assessee discharged BCD at merit rate of 10%, 0% CVD and 4% SAD (under Notification No. 19/2006- Cus. dated 01.03.2006). The department was of the view that the subject item as comprised of phytoharmones, classifying them under CTH 30029030 appeared to be incorrect and the goods appeared to be rightly classifiable under the CTH 38089340 as plant growth regulators. The department relied on the test reports before rejecting the declared classification. The Assessee- Importer disputed that the subject goods are not classifiable as plant growth regulators under CTH 3808 9340 as the subject goods are not separate chemically defined elements or compounds and therefore, the subject goods are excluded from that Chapter by virtue of Note 1(a)(2) to Chapter 38. In their written submissions, the Assessee-importer have relied on various case laws contesting the classification arrived at by the department and countered the confiscation and imposition of penalty in the impugned order. The department has also filed an appeal praying for imposition of equal penalty under Section 114AA of Customs Act, 1962 in as much as suppression was duly established by the findings in the impugned order.

15. We find that CTH 300290 includes Cultures of micro-organisms (excluding yeasts). These include ferments such as lactic ferments used in the preparation of milk derivatives (kephir, yogurt, lactic acid) and acetic ferments for making vinegar, moulds for the manufacture of penicillin and other antibiotics, and cultures of micro-organisms for technical purposes (e.g., for aiding plant growth).

16. The Ld. Advocate has relied upon the Notes 1 to Chapter 38 which says that imported product is not a separate chemically defined element or compound and as such its classification as Plant Growth Regulator under CTH 38 is ruled out. However, the above Chapter Note very clearly makes an exception in respect of insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant growth regulators, disinfectants and similar products. The relevant Chapter Note 1 to Chapter 38 reads as under: -