Neem Biocide Plant VERSUS C.C.E. & S.T.-Vadodara-I

Customs, Excise & Service Tax

 Appellate Tribunal West Zonal

Bench At Ahmedabad

 

REGIONAL BENCH- COURT NO. 3

Excise Appeal No. 11384 of 2013-DB

(Arising out of OIO-14-CEX-OA-NEEM-COMMR-I-2013 dated 21/02/2013 passed by Commissioner of Central Excise, Customs and Service Tax-VADODARA-I)

 

Neem Biocide Plant

VERSUS

C.C.E. & S.T.-Vadodara-I

 

WITH

 

 

• ExciseAppeal  11385 of 2013- Ajay Bhatnagar
• ExciseAppeal  12004 of 2016-Neem Biocide Plant

 

APPEARANCE:

Shri Harish Bindu Madhavan, Advocate for the Appellant

Shri Vijay G. Iyengar, Assistant Commissioner (AR) for the Respondent

 

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON’BLE MEMBER (TECHNICAL), MR. C.L.MAHAR

 

 

Final Order No. A/ 11571 – 11573 /2023

 

 

DATE OF HEARING: 22.03.2023 DATE OF DECISION: 21.07.2023

 

 

RAMESH NAIR

 

The issue involved in the present case is that whether the appellant’s product namely “ Neem Blended Organic Manure Gronimix” manufactured by the appellant is classifiable under CETH 31010099 as other fertilizers claimed by the appellant or under CETH 38089910 as pesticides not elsewhere specified and included is claimed by the department.

2. Shri Harish Bindu Madhavan, Learned Counsel appearing on behalf of theappellant submits that in the present case the issue involved is of

 

classification for which department seeks to change the classification adopted by the assessee. The burden of proof to be discharged is on the department that the classification adopted by the assessee is not correct. In this regard he placed reliance on the judgment of Hon’ble Supreme Court in the case of HPL Chemicals Limited vs. Commissioner of C.Ex., Chandigarh

• 2006 (197) ELT 324 (SC). He submits that in the present case the classification of “Neem Blended Organic Manure Gronimix” the burden has not been discharged by the department. The department has relied on the following documents to state that the goods cannot be classified as “fertilizer” and are to be classified as pesticides:
  1. Contentin pamphlet/advertisement of the product,
  2. Statementsof dealers of the Appellant taken under Section 14 of the Central Excise Act and

• The Letter No. IQ/QC/V/NOC/22948/06 dated 19.12.2006 issued by the Directorof Agriculture, Gujarat State which states that Neem Blended Organic Manure is not included in the Fertilizer (Control) Amendment Order, 2008.
• He submits that none of the above documents can be accepted to determine the classification of the product in hand. He submits that the department has relied upon the statements of dealers to whom the goods were sold. However, the said dealerswere not cross-examined as the adjudicating authority has rejected the request of cross – examination on the ground that the statement was anyways only what was in the pamphlet of the  He submits that the statement without cross-examining the witnesses cannot be treated as admissible evidence in terms of Section 9 D of Central Excise Act. He placed reliance in the following judgments:-
  • Sardar Trading Co. vs. CCE & ST- Rajkot, – 2022 (8) TMI 646 –CESTAT Ahmedabad.
  • Meera Pipes PvtLtd vs. CCE & ST, Ahmedabad –III – 2021 (10) TMI 585 – CESTAT Ahmedabad.
  • M/s. G-Tech Industries Ltd Vs. Union of India – 2016 (339) ELT 209 PBH
• Without prejudice, he submits that theimpugned order has not considered the whole description in the pamphlet/advertisement and has only picked and chosen parts which if read alone gives an impression that Gronimix is only a pesticide. It is his submission that this action of the department is erroneous and not sustainable in law.

 

• He submits that the department has relied upon the letter of Director of Agriculture which states that Neem Blended Organic Manureis not included in the Fertilizer (Control) Amendment  Order, 2006. He submits that the notification under the Fertilizer (Control) Amendment Order,2006 is not a pre-condition for classification of the Gronimix as “Fertilizers” under CETH 31010099 as per perusal of the tariff heading. He placed reliance on the board circular No. 392/25/1998-CX dated 19.05.1998. He also placed reliance on this Tribunal decision in the case of Sree Ramcides P. Ltd  CCE & ST., Tirchirapalli – 2016 (337) ELT 412 (Tri. Chennai).
• He also submits that the impugned order relying on the definition from Wikipedia is also not acceptable. He submits that as perthe composition of ingredients of Gronimix which itself shows that the product is the fertilizer and warrants classification as ‘ other Fertilizer” under CETH 31010099. He submits that fertilizer is not defined under the tariff. The product is understood by common man as any substance which when added to the soil increases its productivity as held by the Hon’ble Tirbunal; in Leeds Kem vs. Commissioner of C.Ex. Aurangabad – 2001 (134) ELT 294 (Tri. Del). In the instant case, ‘Gronimix’ is used to increase the productivity of the soil. This is evident from pamphlet relied upon by the Department itself. This is also evident from the affidavits provided by the farmers stating that the Gronimix is useful in increasing the fertility and water retention capacity of the soil which in turn increases  These affidavits have been ignored by the department for no proper reason. He submits that the Gronimix is used predominantly as ‘Fertilizer”. Since it is made of “Neem”, it has certain inherent characteristics which controls nematodes. However, this incidental/ secondary use cannot be pressed to classify Gronimix as pesticide when the primary use for which is it is manufactured and sold for enhancing the productivity of the soil. In this regard reliance was placed on Commissioner of Central Excise vs. Kishan Brothers – 2007 (218) ELT 623 (Tri.-Kol). He also placed reliance on the following judgments:-
  • Puma Ayurvedic Herbal (P) Ltd vs. Commissioner of Central Excise – 2006 (196) ELT3 (SC)
  • Commissioner of Central Excise , Calcutta Vs. Calcutta Springs Ltd – 2008 (229) ELT 161 (SC)
• He further submits that as per the test report from the Pesticide ResidueLaboratory and the Institute of Pesticide Formulation Technology (a Government of India Society under the Department of Chemicals & Petrochemicals) the product Gronimix does not have “Pesticides”. He further

 

submits that the department did not bring anything significant on record to prove that the product is classifiable as “pesticide.” The test report was ignored by the department which is not permissible as per the following judgments:-

• GPlywood India (P) Ltd vs. Commissioner of Central Excise – 2001

(96) E.C.R 709(Tri.- Chennai)

• AdaniWilmar Limited  Commissioner of Customs, Kandla – 2012

(278) ELT 663 (Tri.- Ahmd)

• Inter-Continental(India)  Union of India – 2003 (154) ELT 37 (Guj.) – affirmed in 2008 (226) ELT 16 (SC)
• Arbee Biomarine Extracts Pvt.Ltd Vs. Commissioner of Customs – 2021(375) ELT 251 (Tri.-Bang)

• He also submits that the demand was raised under extended period which cannot be invoked and also the penalty under 11 AC cannot be imposed. It is issue of classification and bona fide interpretation, therefore there is no willful suppression with intent to evade payment of duty. He placed reliance on the following judgments:-
  • DensonsPultretaknik  Commissioner of Central Excise – 2003 (155) ELT 211(SC)
  • PadminiProducts Ltd  CCE -1989 (43) ELT 195 (SC)

 

• On the basis of above submission he prays that impugned order be set aside and appeal be allowed.

3. Shri Vijay G. Iyengar, Learned Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned
4. We have carefully considered the submission made by both sides and perused the record. We find that the issue involved in the present case is on the basis of the facts of this case. The issue of classification is not free from doubts and it is a debatable one. In the same pamphlet of the product it describes the product as fertilizer and on the same pamphlet it alsomentions that the product is pesticide. Moreover, only because the product Gronimix is made pre-dominantly by Neem, it cannot be conclusively said that because of this reason the good is fertilizer as there are pesticides/insecticides made of Neem/Neem oil. On the other hand, we find that the adjudicating authority has ignored so many vital material relied upon by the appellant such as the department has not discharged the burden  which is required in the matter of   The details

 

mentioned in the pamphlet/advertisement of the product were not considered properly. Though there are statements of dealers which states that the product is used as insecticide/pesticide but those dealers have not been cross examined as requested by the appellant. In our view when there are evidence available in the case it becomes incumbent on the adjudicating authority to allow the cross – examination of the witnesses. The adjudicating authority has seriously defied the mandatory provision of Section 9D of Central Excise Act, 1944. Therefore, in our view it is necessary that the Adjudicating Authority must allow the cross- examination of witnesses.

• We also observed that the appellant has relied upon the test report which states that the product Gronimix is not a pesticide. In the presentcase the statement of farmers were also recorded who have stated that the Gronimix is used as a fertilizer which was ignored by the Adjudicating Authority. In view of the above we find that the Adjudicating Authority grossly violated the principle of natural justice while passing the impugned order. Therefore, we set aside the impugned order and allow the appeal by way of remand for passing a fresh de novo order after considering various materials available on record in proper prospective.
• Needless to say that the appellant shall be given the opportunity for personal hearingand making their submission, if any, required before passing the de novo order. Since the case pertains to the period 2007 to 2014, the de novo order shall be passed within a period of two months from the date of this order.

5. Accordingly, the appeal is allowed by way of remand to the Adjudicating Authority.

 

 

(Pronounced in the open court on 21.07.2023)

 

RAMESH NAIR MEMBER (JUDICIAL)

C.L.MAHAR MEMBER (TECHNICAL)