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2021 (10) TMI 59 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARATClassification of goods - HSN Code - Organic manure - classified under Chapter subheading No.31059090 on which GST liability was 5% or otherwise - Bio-fertilizers - classified under Chapter sub-heading No.30029030 on which GST liability was 12% or otherwise - Nitrogeneous mixture fertilizers - classified under Chapter sub-heading No.31029090 on which GST liability was 5% or otherwise? - Mixture of fertilizers - classified under Chapter sub-heading No.31059090 on which GST liability was 5% or otherwise? - HELD THAT:- From the submission of the appellant, especially the composition of the inputs contained in their products i.e. ‘Bio-fertilizers’ and comparing the same to the definitions of ‘Bio-fertilizers’, it does not appear to meet the criteria of ‘bio-fertilizer’ particularly because ‘Organic manure’ (main source of which is animal waste) is a major input constituting 50% of the mixture whereas Bio culture contained therein is only 2%. Further, the appellant themselves have submitted that they are presently manufacturing only two types of ‘Bio-fertilizers’ namely Phosphate Solubilising Bacteria and Potassium mobilising Bio-fertilizers. Hence, it can be presumed that the composition of inputs submitted by them pertains to these two products only and therefore the classification to be decided is in respect of these two products only - in the instant case, the two products i.e. Phosphate Solubilising Bacteria and Potassium mobilising Bio-fertilizers contains a mixture of various inputs in which ‘Organic manure’ is the main input since it constitutes 50% of the final product. Since the two products i.e. Phosphate Solubilising Bacteria and Potassium mobilising Bio-fertilizers contains a mixture of various inputs, reference will be required to be made to Rule 3(b) of the General Rules for the interpretation of Customs Tariff, in order to sort out the matter. As per Rule 3(b), mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as the criterion is applicable. Since the two products are mixtures that constitute of 50% organic manures, it can be construed that organic manure is the main component in the mixture and therefore, it is ‘Organic manure’ which gives the mixture it’s essential character - in light of Rule 3(b) of the General Rules for the interpretation of Customs Tariff, the products of the appellant would be rightly classifiable under the Chapter Sub-heading applicable to ‘Organic manure’ only. The appellant has accepted the classification of their product ‘Organic manure’ as given in the impugned order of Advance Ruling. Hence it can be concluded that the two products namely Phosphate Solubilising Bacteria and Potassium mobilising Bio-fertilizers manufactured and supplied by the appellant are classifiable under Chapter subheading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) and liable to GST at 5% in terms of Sl.No.182D of Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time). The two products namely ‘Phosphate Solubilising Bacteria’ and ‘Potassium mobilising Bio-fertilizers’ manufactured and supplied by the appellant M/s. G.B. Agro Industries, Bharuch are classifiable under Chapter sub-heading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) and liable to GST at 5% in terms of Sl.No.182D of Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 - the classification of the products is entirely based on the composition of inputs as given by the appellant and any alteration/change in the composition of the inputs would also result in alteration of the classification of the aforementioned products.
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