ORDER
V.K. Agrawal, Member (T)
1. In these two appeals preferred by the Revenue, the common issue involved is whether the product “FLORAMIN” is classifiable under sub-heading No. 3808.90 of the schedule to the Central Excise Tariff Act, as claimed by the Revenue or under sub-heading 3101.00 as decided by the Commissioner (Appeals) in the impugned orders.
2. Shri H.K. Jain, ld. SDR submitted that Respondents, M/s. Unique Farmaid Pvt. Ltd. manufacture a product “Floramin” which is a bio stimulant for improving colour, vigour and size of the plant; that the main function of the impugned product is breaking of dormancy in the plants; that the product is intended to enhance growth, vigour and improve crop yield by way of inhibiting certain Physiological process in Plant and promoting others; that the product is packed in unit containers from 100 ml. onwards and is used by way of spray on the plant. He further mentioned, that the product literature describes the product as compatible with pesticides and is used in smaller doses; that according to product literature, floramin can be applied as foiler spray 500 ml. in 200 litres of water for one acre of land, seed treatment @ 10 ml. per litre of water for 30 minutes and Root Dipping @10 ml. per litre of water dipped before transplating; that fertilisers are not used in such small doses; that the impugned product is nothing but a plant growth regulator. He also mentioned that according to Hawley’s condensed Chemical Dictionary (11th Edition), fertiliser is a substance or mixture that contains one of the primary plant nutrients and sometimes also secondary and/or trace nutrients. The primary nutrients are nitrogen, phosphorous and potassium; secondary nutrients are calcium, magnesium and sulphur; trace elements (Iron, copper, Boron, Magnesium, Zinc and Molybdenum) are also among the 12 elements considered essential for plant growth. New Webster’s Dictionary of English Language defines fertilisers as any substance such as manure or a chemical compound used to enrich the soil. He contended that for a product to qualify as fertiliser, it should contain primary nutriants like Nitrogen, Phosphorous, Potassium etc. in various forms which would give nutrition to the plant by way of enriching the soil; that the product floramin, judged from this yardstick is not a fertiliser; that it does not enrich the soil and it does not give nutrition to the plant or crop.
3. Countering the arguments, Shri Rajesh Chibber, ld. Advocate, submitted that Floramin is a bio product derived from natural plant vegetable specially from berseam seed by way of its fermentation by using Alkaline media; that Heading 31.01 of C.E.T.A. covers animal or vegetable fertilisers whether or not mixed – together or chemically treated; fertilisers produced by the mixing or chemical treatment of animal or vegetable products; that Chapter 38 deals with miscellaneous chemical products; that the product fall under Chapter 38 must necessarily be synthesised out of chemical products and not anything else; that plant growth regulator are applied to alter the life process of a plant, so as to accelerate or retard growth, enhance yield, improve quality or facilitate harvesting etc.; that plant hormones (Phyto hormones) are one type of Plant Growth Regulator; that thus the plant growth regulator under Chapter 38 are necessarily to be manufactured synthetically from chemicals. He also mentioned that Plant Growth Regulator under Chapter 38 are necessarily to be manufactured after obtaining the required licence from the State Government under the Insecticides Act. He further mentioned that Division of Entomology of Indian Agricultural Research Institute in letter dated 15-1-19 (sic) has mentioned that Floramin derived from natural vegetable Berseam Plant seed may be considered as Vegetable Fertiliser. He thus contended that the impugned product is a vegetable fertiliser classifiable under Heading 21.01. He finally submitted that the Assistant Commissioner while confirming the demand of duty, has also imposed a penalty of Rs. 40,000/- which is not imposable as the issue involved is of classification.
4. In reply, the ld. SDR, submitted that the Certificate now relied by the Respondents was not before the Adjudicating Authority and cannot be considered at second appeal stage. Further, the Division of Entomology, in its first letter dated 26-5-1997, did not specify the impugned product as a fertilizer; it only mentioned that the product has beneficial effects on the physiology and growth of plants with a definite increase of yield and quality of crops; that even in second letter dated 15-1-19 (sic) it is mentioned that, product may be considered as vegetable fertiliser for being its beneficial property on the physiology and growth of plants; that this letter does not discuss the various Headings/sub-headings in the schedule to the Central Excise Tariff Act and further even Insecticides can have beneficial property on the physiology and growth of plants; that the Department of Entomology does not understand the scheme of Central Excise Tariff. The ld. SDR. also referred to Explanatory Notes of HSN below Heading 38.08 according to which Plant Growth regulators are applied to alter the life process of a plant so as to accelerate or retard growth, enhance yield, improve quality or facilitate harvesting etc. and contended that the impugned product performs the similar function as it helps in improving colour, vigour and,size of the plant of various crops. He also referred to Hawley’s Condensed Chemical Dictionary, according to which Plant growth regulator is “an organic compound either natural or synthetic that modifies or controls one or more specific physiological processes within the Plant…A large number of chemicals tend to increase the yield of certain plants such as sugar cane, corn, etc.”
5. We have considered the submissions of both the sides. The main contention of the Respondents for classifying the product under Heading 31.01 is that the impugned product is vegetable based i.e. prepared from Berseam seed. The Commissioner (Appeals) has also classified the product under Heading 31.01 as, according to him Chapter 38 covers a number of Chemical and related products and it does not mention anywhere the products which are vegetable based. There is no substance in these submissions and findings. Both Chapter 31 and 38 fall under Section VI, the Title of which is “Products of the Chemical or Allied Industries”. If the contention of the Respondent is accepted, the impugned product will also not even fall under Chapter 31. Rule 1 of the Rules for the Interpretation of the Schedule provides that titles of Sections and chapters are provided for ease of reference only; for legal purpose, classification shall be determined according to the terms of the headings and any relative section or Chapter Notes. Heading 38.08 applies to “Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant growth regulators; disinfectants and similar products”. The Heading does not exclude the Plant growth regulator which is vegetable based. As contended by the Ld. SDR the main function of the impugned product is that it breaks the dormancy of the plant and the product is intended to enhance growth, vigour and improve crop yield. We are strengthened in our view by decision of the Larger Bench of the Appellate Tribunal in the case of Tetragon Chemicals (P) Ltd. and Ors. v. C.C.E., Bangalore and Ors. -1999 (30) RLT 366 wherein the Larger Bench considered the question whether Heading 23.02 in Chapter 23, the title of which is “Residues and Wastes from the Food Industries; Prepared Animal Fodder”, covered preparations of a kind used in animal feeding which contained minerals or synthetic active ingredients. The Tribunal relied upon the decision of the Supreme Court in the case of Frick India Ltd. -1990 (48) E.L.T. 627 wherein it was held that “it is well settled that the Headings prefixed to sections or entries cannot control the plain words of the provisions; they cannot also be referred to for the purpose of construing the provision when the words used in the provision are clear and unambiguous; nor can they be used for cutting down the plain meaning of the words in the provision.” The Tribunal, therefore, held that “note of Heading 23.02 of CETA, 1985 has to be read and meant to extend the scope of the heading so as to include preparations not confined to those obtained by processing animal or vegetable material but to preparations containing synthetic materials also.” We also observe that this impugned product, according to the Respondent, has beneficial effects on the Physiology and growth of Plants with a definite increase of yield and quality which is the characteristics of plant growth regulator. We also do not find any substance in ld. Counsel’s submission that the product cannot be classified as plant growth regulator as it is not covered under the Insecticides Act, 1968 as it is not the case of the Revenue that the impugned product is an insecticide; further the product is not designed to control insect life that is harmful to man, either directly or indirectly as destroyers of crops, food products, or textile fabrics. The provisions of Insecticides Act applies only to Insecticides and therefore, non application of the said Act to the impugned product is not relevant for its classification under the Central Excise Tariff Act. We agree with the submissions of the ld. SDR regarding the letters from Department of Entomology. Finally we observe that Appellants have also referred to a product planofix (Plant Growth Regulator) manufactured by M/s. Rhone Poulenc which contained 4.5% Alpha Napthyl Acetic acid solution and for which the licence under Insecticides Act is required. The Appellate Tribunal, in the case of Bakul Chemicals P. Ltd. v. C.C.E. -1999 (30) RLT 269 has held that Alpha Napthyl acetic acid is a plant growth regulator classifiable under heading 3808.90 and not as insecticides/pesticides under Heading 3808.10 of CETA, 1985. We, therefore, held that the impugned product is classifiable under sub-heading 3808.90 of the Schedule to the Central Excise Tariff Act as Plant growth regulator. Accordingly we set aside the impugned order. However, we agree with the ld. Advocate that no penalty is impossible as this was a case of interpretation of the Heading/sub-heading of CETA, 1985 for the purpose of classification and accordingly the penalty of Rs. 40,000/- imposed by the Adjudicating Authority is set aside. Both the appeals filed by the Revenue and Cross objections filed by the Respondents are disposed of in above terms.