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2021 (1) TMI 591 - AAR - GSTClassification of goods - product ‘Zn EDTA - Zinc Ethylenediamine Tetra Acetic Acid) - Fe EDTA - (Iron Ethylenediamine Tetra Acetic Acid) Acetic Acid) - applicability of correct S. No. of Schedules under Notification No.1/2017-Central Tax(Rate) dated 28.06.2017(as amended) and corresponding Notifications issued under GGST Act, 2017 and IGST Act, 2017 - HELD THAT:- Applicant are engaged in the manufacture and supply of a Zinc Ethylenediamine Tetra Acetic Acid (Zn EDTA-Chelate Zinc as Zinc EDTA), Iron Ethylenediamine Tetra Acetic Acid (Fe EDTA-Chelate Iron as EDTA) and other products. The product ‘Zn EDTA’ contains Zinc 12%+, Nitrogen 6.9%&EDTA Acid Salt and it has Ph level of 6 - 6.5. The product ‘Fe EDTA’ contains Iron-12%+, Nitrogen-6.5% &EDTA Acid Salt and it has Ph level of 6-6.5. They sell the products, ‘Zn EDTA’ and ‘Fe EDTA’ in 25 Kgs. packing in HDPE Bags. Micronutrients are essential nutrients that are required in small quantities for the normal growth and development of plants. As on today, iron (Fe), manganese (Mn), zinc (Zn), copper (Cu), boron (B), molybdenum (Mo), nickel (Ni) and chlorine (Cl) are included in this category. These elements are also called minor or trace elements, but this does not mean that they are less important than macronutrients. These micronutrients are sold in the market as `micronutrient fertilizer’ supplying one or more of the eight essential nutrients listed above, namely iron to chlorine. However, in the trade parlance sale of micronutrients as ‘micronutrient fertilizers’ would not lead to classification thereof under chapter 31 as fertilizers for the purposes of GST. For classification under chapter 31, at least one of the elements, namely- nitrogen (N), phosphorus (P) or potassium (K) should be an essential constituent of the fertilizer as per chapter note 6 of chapter 31 - Further, there is no specific heading in the tariff for classification of micronutrients. However, where the micronutrient is a separate chemically defined compound, it will be classifiable under the heading for that chemically defined compound under chapter 28 or chapter 29. For example, some of the sulphates of micronutrients are specifically covered under CETH 2833. PGRs are different from nutrients, be it macronutrient or micronutrient. PGR as a substance is specifically covered under HSN 3808. More specifically, Plant Growth Regulators are covered under tariff item 3808 9340 - Fertilizers are classified under chapter 31 of the Customs Tariff and for this purpose they may, inter alia, be minerals or chemical fertilizers nitrogenous (CTH 3102), phosphatic (CTH 3103), potassic (CTH 3104) or fertilizers consisting of two or three of the fertilizing elements namely nitrogen, phosphorous and potassium; other fertilizers (CTH 3105). For the purpose of classification of any product as “other fertilizers”, chapter note 6 of Chapter 31 is relevant which provides that the term “other fertilizers” applies only to products of a kind used as fertilizers and contain, as an essential constituent, at least one of the elements nitrogen, phosphorus or potassium. It is quite clear that for any product to merit classification under CTH3105 as other fertilizers, the product must have nitrogen or phosphorus or potassium or their combination as an essential constituent providing the essential character to the product. The chemical elements – nitrogen, phosphorus and potassium are also referred as macronutrients or primary fertilizer elements and are required in higher quantity by the plants - any product where the essential elements are not nitrogen or phosphorus or potassium or their mixture, would not merit classification under CTH 3105. Further, the specific exclusion of separate chemically defined compounds as laid down in chapter note 1 (b) and in the HSN Explanatory Notes to the heading 3105.90, reinforce the above conclusion. The products, viz. ‘ZN EDTA’ and ‘Fe EDTA’ are used as fertilizer to overcome zinc deficiency and iron deficiency respectively, in plants as well as a source of zinc and iron respectively for those plants which require zinc and/or iron for their normal growth and higher yields. Further, ‘Zn EDTA’ contains Zinc 12%+, Nitrogen 6.9% &EDTA Acid Salt and ‘Fe EDTA’ contains Iron 12%+, Nitrogen 6.5% &EDTA Acid Salt - the products, viz. Zinc Ethylenediamine Tetra Acetic Acid (Zn EDTA-Chelate Zinc as Zinc EDTA) and Iron Ethylenediamine Tetra Acetic Acid (Fe EDTA-Chelate Iron as Fe. EDTA) are ‘micronutrients’ and merits classification under Chapter sub-heading 3824 99 90 of the First Schedule to the Customs Tariff Act, 1975. Applicable rate of GST - HELD THAT:- The micronutrients products, viz. “Zn EDTA” and “Fe EDTA” manufactured and supplied by the applicant are covered under Sl. No.7 & 8 of 1(g) of Schedule I (Micronutrients), Part-A of the Fertilizer Control Order, 1985, as amended and the Applicant is also registered under the Fertilizer Control Order, 1985. Under GST, the ‘micronutrients’ classifiable under Chapter 28 or 38, which are covered under serial number1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985 and are manufactured by the manufacturers which are registered under the Fertilizer Control Order, 1985 are covered under Sl. No. 56 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended), and corresponding Notifications issued under the GGST Act, 2017 and IGST Act, 2017 - the products, viz. “Zn EDTA” and “Fe EDTA” manufactured and supplied by the applicant are classifiable under HSN 3824 and are covered under Entry at Sl.No.56 of Schedule-II of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 as amended, on which total rate of GST chargeable is 12%. The applicant has further contended that there is no condition under S. No. 56 of Schedule-II of the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) that the buyer/recipient of ‘micronutrient fertilizer’ should also be registered under the Fertiliser Control Order, 1985, in the understanding of the applicant, the supply of products, ‘Zn EDTA’ and ‘Fe EDTA’ by the applicant to the recipient, who is not registered under the Fertiliser Control Order, 1985, will not have any impact on the applicability of S. No.56 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended), and corresponding Notifications issued under the GGST Act, 2017 and IGST Act, 2017 - the supply of the products `Zn EDTA’ and ‘Fe EDTA’ by the applicant to the recipient, who is not registered under the Fertilizer Control Order, 1985, will have no impact on the applicability of particular S. No. of the Schedules of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) and corresponding Notification No.1/2017-State Tax (Rate) dated 30.06.2017 (as amended) and Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 (as amended), as there is no such condition prescribed in said entry under said notifications.
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