TMI Blog2019 (10) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... SER - HELD THAT:- From the use of product, it can be concluded that the product is an organic insecticide falls under HSN code 3808. Further, the presence of nutrient in small quantity will not alter the essential character of the product as an insecticide liable to GST @ 18%. Product QPRAX - HELD THAT:- The product is an Organic Fungicide falling under HSN 3808 liable to GST @ 18%. Product TELNAR - HELD THAT:- The product is advertised by the appellant as broad spectrum organic bactericide. There is no doubt that the product is Organic Bactericide-Pesticide covered under Tariff Heading 3808 liable to GST @ 18%. Product VK's NEMO - HELD THAT:- From the literature and the use of product, it can be said that the product is nematocides covered under Tariff Heading 3808 liable to GST @ 18%. Product STRESSOUT - HELD THAT:- Having regard to publicity literate, its content, the mode of action, the product falls under HSN Code 3808 @ 18%. For classification, reliance placed in the case of KULKARNI BLACK AND DECKER LTD. VERSUS UNION OF INDIA [ 1991 (7) TMI 95 - HIGH COURT OF JUDICATURE AT BOMBAY ] where it was held that The classification cannot be based only upon what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts correctly classify under HSN 3 101 or 3105. Additional submissions: PRODUCTS SUBMITTED FOR CLARRIFICATION REGARDING CLASSIFICATION IS. ORGANIC CERTIFIED PRODUCTS AS PER STANDARDS OF (NPOP) NATIONAL PROGRAMME FOR ORGANIC PRODUCTION. 1. Our product for which seeking clarification is certified Organic Products under the NATIONAL PROGRAMME FOR ORGANIC PRODUCTION (NPOP) GOVERNED UNDER (APEDA-AGRICULTURE AND PROCESSED FOOD PRODUCTS) THE MINISTRY OF COMMERECE INDUSTRY GOVT. OF INDIA. The Government of India has implemented the National Programme for Organic Production (NPOP). The national programme involves the accreditation programme for Certification Bodies. standards for organic production. promotion of organic farming etc. The NPOP standards for production and accreditation system have been recognized by IFOAM (International Federation of Organic Agro Movements), European Commission and Switzerland for unprocessed plant products as equivalent to their country standards. Similarly, USDA has recognized NPOP conformity assessment procedures of accreditation as equivalent to that of US. With these recognitions, Indian organic products duly certified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/or crop (basic functional definition); and (ii) It should be specified in either Part A of Schedule-I or Schedule-III or Schedule-IV. (Out of the fertilizers, which qualify the functional definition, only the fertilizers which are listed in schedule shall be subjected to controls under FCO). Therefore, the products manufactured by us are organic fertilisers by functions and also having fertilizing elements. But as clarified above they won t be governed under FCO as well as Insecticides Act, 1968. The organic products not covered under FCO are governed as per NPOP Norms and certified accordingly. [Copy of definition of fertilisers as per FCO enclosed Annexure-C] 2. FCO is not relevant to classify products as fertilisers , CBIC Circular No. 1022/10/2016-CX dated 06th April 2016. a) As stated in above Para FCO are not relevant for classification of fertilisers products, the same also clarified in CBIC Circular 1022/10/2016-CX dated 06th April 2016. Para 4 of the circular reproduce below for your ready reference; 4 . Fertilizers are classified under chapter 31 of the Central Excise Tariff and for this purpose they may interalia be minerals or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . .. iii) What are Plant Growth regulators (PGRs) What are their functions in the plant? PGRs: Plant growth regulators defined as organic compounds other than nutrients that affect the physiological processes of growth and development in plants when applied in low concentrations. Plant growth regulators are active at low concentrations (1-10 ng / nl) in promoting, inhibiting or modifying growth and development. They are either natural or synthetic compounds that are applied directly to a target plant to alter its life processes or its structure to improve quality, increase yields, or facilitate harvesting. In modern agriculture, people have established the benefits of extending the use of plant hormones to regulate growth of other plants. When natural or synthetic substances used in this manner, they are called Plant Growth Regulators. Role: Plant hormones are produced naturally by plants and are essential for regulating their own growth. They act by controlling or modifying plant growth processes. such as formation of leaves and flowers. elongation of stems. development and ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading further covers anti-sprouting products and plant growth regulators intended to inhibit or modify physiological processes in plants. Plant Growth Regulators are applied to alter the life processes of a plant so as to accelerate, or retard growth, enhance yield, improve quality or facilitate harvesting Note : The products covered under 38 are intended to inhibit or modify physiological changes in plants, i.e., altering or modifying the plant s structure and life processes. PGRs particularly bring hormonal changes in the plants. PGRs effect both accelerated and retarded growth. And all of them are covered in the schedule of Insecticide Act, 1968 as amended time to time. Chapter Note in CTA, 1975 This Chapter covers most products in general uses as natural or artificial fertilizers: Note : Chapter Note to Chapter 31 States that it covers products used as natural or artificial fertilizers. Chapter Note in CTA, 1975 This Chapter covers a large number of chemical and related products. It does not cover separate chemically defined elements or compounds (usually classified in Chapter 28 or 29), with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and from Private Labs also. As per Lab Test Report it was confirmed that, Nitrogen and Potash available / found in the product. Copy of Lab Test Report for products Autus, Q-Prax, SJ-Eraser, Shyam Samruddhi, SJ Ninja, Stress Out, Telnar, and VK s Nemo etc. enclosed herewith for your ready reference: (Copy of Test Report enclosed Annexure F ] B) We rely on the judgement of Hon ble CESTAT-Chandigarh in the case of Safex Chemical India Ltd. Vs. Comm. Of Central Excise Rohtak reported in 2017 (7) G.S.T.L. 234 (Tri. Chan.) = 2017 (9) TMI 140 - CESTAT CHANDIGARH , the Hon ble CESTAT pronounced that, Product composed of sulphates, borates, silicates of potassium, ammonium, and iron and containing auxins cytokinins also in addition to other ingredients, used for replenishment of nutrients of soil, classifiable under sub-heading 3101 00 of Central Excise Tariff as vegetable fertilizer as held under impugned order after detailed analysis, and not under sub-heading 3808 90 ibid as plant growth regulator . [ Copy of Case Law enclosed Annexure-G] C) We also rely on the judgement of Hon ble CESTAT- HYDERABAD in the case of ARIES AGROVET INDUSTRIES LTD. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Nitrogen Source - 10.00% Organic Phosphorus Source 01.00% Organic Potash Source - 01.50% Organic Sulphar 12.00% Humic Acid 04.79% Glutamic Acid 04.65% Methionine 0.40% Phenylalanine 0.45% Lysine 0.32% Arginine 0.25% Glycine 0.30% Additives 0.34% Organic Matter 60.00% Organic Slow Release Soil Manur 3. SJ-NINJA NINJA SJ-Ninja is a micronutrient liquid supplying zinc and copper as a nutrient source to plants. SJ-Ninja is with pure natural properties safe to the crops human. SJ-Ninja can be included in IPM programme. SJ-Ninja also increases plant immunity. Algal extract 10% Organic copper 0.03% Zinc. 0.9% Stabilizer 10% Aqua Q.S Micronutrient liquid 4. SJ-ERASER SJ-Eraser is a unique micronutrient liquid fomulation: SJ-Eraser gives result in 48 to 72 hours. Plant vigour and strength is developed due to use of SJ-Eraser. SJ-Eraser enhances plant immunity. SJ-Eraser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S Sr.No. Product Name Use Content Type HSN GST Rate Condition 1. AUTUS AUTUS is an organic manure liquid. It enhances nitrogen uptake and photosynthesis process. AUTUS increases lateral and white root population Improving rate of absorption of fertilizers helping to withstand stress condition. AUTUS increases yield, keeping fruit, vegetables and perennial crops, quality while reducing flower fruit drop. Marine Plant Extract-2%. Potash -0.2% Copper- .02 % Stabilizer-10% Aqua Q.S. Organic manure liquid 3101 00 99 Nil or 5% Other than those put-up in unit container or put-up unit container 2. SHYAM SAMRUDDHI Shyam Samruddhi is a novel combination of organic, N,P,K,S, and amino fertilizer source providing Zn, Fe, Me, Boron microelements in bioavailable form. Shyam Samruddhi acts as exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% Stabilizer 10% Solvent - Q.S. Microfertilizer liquid 3101 00 99 Nil or 5% Other than those put-up in unit container put-up in unit container 6. TELNAR Telnar a unique micronutrient liquid. Telnar helps plant to achieve better yield. Telnar removes micronutrient deficiency: Telnar helps plant to become more resistant against bacterial pathogenic attack Telnar can be included in IPM programme. Algal extract 10% Copper- 0.6% Emulsifiers - 05% Stabilizers - 05% Solvent Q.S. microfertilizer liquid 3101 00 99 Nil or 5% Other than those put-up in unit container or put-up in unit container 7. VK S NEMO VK s NEMO is a specialised microfertilizer liquid. VK s NEMO converts more amino acids in proteins. VK s NEMO on soil application enhances starch production and root development. VIC s NEMO also increases plant immunity against nematode infection. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Maharashtra, 422008 having GSTIN No. 27AAHCA8881H1Z8. We are engaged in manufacturing of Organic Fertilizers. We seek clarification on classification and GST rate applicable for our manufacturing goods. The list of goods along with its use, leaflets and products certificate and GST rate applicable according to us already submitted with the application. We intend to add / submit following in our submission; 1. HSN 3101 cover goods of animal or vegetable Fertilizers, whether or not mixed together or chemically treated; Fertilizers produced by the mixing of chemically treatment of animal or vegetable products or Organic fertilizers. 2. HSN 3105 cover goods of Mineral or chemical fertilizers containing two or three of the fertilizing elements nitrogen, phosphorus and potassium. 3. Our manufacturing products mentioned in enclosed list contain Animal or Seaweed, Plant extract, Nitrogenous, pottassic fertilizers, Micronutrients. It not just grows the plant, but also enhances the immunity of plant against several diseases. Therefore, products squarely cover under HSN 3101 and 3105. 4. The goods manufacture and supplied by us under brand name and specifically co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil and/or crop and specified in Part A of Schedule I and includes a mixture of fertilizer and special mixture of fertilizers provisional fertilizer, customized fertilizer, Biofertilizers specified in Schedule Il and organic fertilizers specified in Schedule iv. Schedule - IV [see clause 2(h) and q)] Part -A SPECIFICATION OF ORGANIC FERTILISER 1. City compost: (i) Moisture, per cent by weight 15.0-25.0 (ii) Colour Dark brown to black (iii) Odour Absence of foul odour (iv) Particle size Minimum 90% material should pass through 4.0 mm IS Sieve (v) Bulk Density (g/cm 3 ) 0.7 -0.9 (vi) Total Organic Carbon, 16.0 Per cent by weight, Minimum (vii) Total Nitrogen (as N) 0.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (viii) Total Phosphate (as P 2 O5), per cent by weight, minimum 0.8 (ix) Total Potassium (as K 2 O), per cent by weight, minimum 0.8 (x) Heavy metal content, (as mg/Kg), maximum Cadmium (as Cd) 5.0 Chromium (as Cr) 50.00 Nickel (as Ni) 50.00 Lead (as Pb) 100.00 3. Pressmud : (i) Moisture, per cent by weight, Maximum 15.0 (ii) Total Nitrogen (as N) per cent by weight, Minimum 1.80 (iii) Total Phosphorous(as P 2 O 5 ) per cent by weight, Minimum 2.00 (iv) C:N ratio, Minimum 10:1 (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s N,P,K and other elements. This may be the claim that it can be categorised as organic fertilizer. This doesn t seems to contain synthetic (inorganic) growth regulator such as Gibbrelic acid or Indole acetic acid. This product may feet in the HSN category 3101 (5%) . 3. Flow chart of manufacturing process also shows that nutritional (micronutrient) elements are used as input. 5. This shows that the product seems to be organic fertilizer and may fit in that HSN category 3105, Excluding, this entry contain goods of this Chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg, which are clearly not to be used as fertilizers SJ-Ninja- 1. This product is certified as organic product by an accredited certifying agency. It is not mentioned anywhere that it is an organic fertilizer. 2. Salient features mentioned for this product shows that this product develop immunity against sucking pest. Further it also claims nervous system damage of pest within 48 to 72 hours. Graphics also indicates potential pesticidal effect. This shows product may feet in the HSN category 3808 (18%). 3. Flow chart of manufacturing process does not show any fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow any fertilizer claim. 4. This shows that the product seems to be organic pesticide and may fit in that HSN category 38080 rather than 3105. VK s Nemo- 1. This product is certified as organic product by an accredited certifying agency. It is not mentioned anywhere that it is an organic fertilizer. 2. Salient features mentioned for this product shows that this product develop immunity against nematode, a soil pest. Further it also claims to have results against nematode within 48 to 72 hours that is an indication of destructive action against nematode, Graphics also indicates potential pesticidal (nematicidal) effect especially mode of action and effect against nematode. This shows product may feet in the HSN category 3808. 3. Flow chart of manufacturing process does not show any fertilizer claim. 4. Though this product also have many soil nutritional features, strong claim is immunity development against nematodes and may be pesticidal effect against nematode by inducing oxidative stress. 5. This shows that the product seems to be organic pesticide and may fit in that HSN category rather than 3105. Stress-out- 1. This product is certified as org ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Narendra K. Nerkar, State Tax Officer (NAS-VATC-018) Nasik appeared and made written submissions. 06. OBSERVATIONS We have gone through the facts of the case and the submissions made by the Applicant and the Department. The issue put before us is in respect of classification and GST rate applicability in case of eight goods manufactured by the applicant. Few facts relevant for the present purpose those are as below. Applicant is engaged in manufacture of various Agro Chemicals claimed as Organic Fertilizers. The product mentioned in the application said to have contained Animal or Seaweed plant extract, Nitrogenous, Potasic Fertilizers and Micro Nutrients. The products according to the applicant not just grows the plant but also enhances immunity of plant against several diseases. As per applicant, the goods manufactured and supplied by them are organic fertilizers which have been certified by the Indocert, Biocert Institute / Authorities appointed under National Programme for Organic production, Department of Commerce, New Delhi. According to the applicant all the products mentioned in the application are classifiable under HSN 3101 or 3105. We find that, applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. compost and crop residues) which are different from manufactured fertilizers synthesized from various chemicals. In general, organic fertilizers act much like the slow-release fertilizers which release nutrients over an extended period of time whereas synthetic fertilizers release required chemicals quickly on their application. The Common characteristic of both organic and manufactured fertilizers is that they contain nutrients that promote plant growth. Plant Growth Regulators: Plant Growth Regulators (also called plant hormones) are numerous chemical substances that profoundly/influence growth and differentiation of plant cells, tissues and organs. Plant growth regulators function as chemical messengers for intercellular communication. There are currently five recognized groups of plant hormones: auxins, gibberellins, cytokinins, abscisic acid (ABA) and ethylene. They work together coordinating the growth and development of cells. Ethylene is mainly involved in abscission and flower secscence in plants and is rarely used in plant tissue culture . In addition to the five principal growth regulators, two other groups sometimes appear to be active in regulatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct separately and further to classify them accordingly. Products:AUTUS As per applicant s contention Autus is an organic manure liquid that enhances nitrogen uptake and photosynthesis. Further, the product increases lateral white root population improving rate of absorption of fertilizers helping it to with stand stress condition. Further, the product contents Potash and Copper. We find that, the product is certified as an organic product by an accredited certifying agency. However, there is no finding by the authority that the product is an organic fertilizer. However, the product literature available on Website of the applicant and also submitted in the hearing suggest that, the product is organic plant growth stimulant. Further from the said literature and as per the mode of action with respect to effect on grape growth, the product influences TCA cycle (krebe cycle). Plant growth regulators are organic compound other than nutrients that effect the physiological process of growth and development in plants when applied in low concentration. As mentioned earlier, they are either natural or synthetic compounds that are applied directly to a target plant to alter its lif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002 (145) ELT-305 (Tri-Delhi) =2002 (4) TMI 481 - CEGAT, NEW DELHI held that, Malariya Larvicide Oil (MLO) is classifiable under sub-heading 380810 of CTA and not under sub-heading 271090 as Petroleum products. From the use of the product we have no doubt to conclude that the product is an organic insecticide falls under HSN code 3808. Further we observe that presence of nutrient in small quantity will not alter the essential character of the product as an insecticide liable to GST @18%.. Product QPRAX : Applicant submit that, the product is liquid micro fertilizer that promotes carbohydrates and protein formation besides lignin synthesis and photosynthesis of plant. The product is algal extract containing small quantity of copper. We find that, the product is certified as organic product by the competent authority. However, there is no mention it as organic fertilizer. Applicant has explained mode of action of the product that inhibit most fungal infection by binding to cell wall of target and killing the cell by changing its permeability an intracellular free radical generation damaging DNA and mRNA of target. It is revealed from content of the literature that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g supplement with following silent features. It induces glycolysis and TCA cycle resulting in improvement of plant metabolism, elicit proline, valine, cysteine, tryptophan and glutamic acid biosynthesis. It enhances colour, sugar content and firmness of roots and flowers. It increases plant tolerance from biotic and abiotic tress like high temperature, alkalinity and salinity. The product is categorically mentioned as growth promoter. Having regards to publicity literate, its content, the mode of action and discussion held herein above with respect to plant growth regulators we find no difficulty in classifying the product as PGR that falls under HSN Code 3808 liable to GST @18%. While classifying the products we have laid emphasis on the content of the product literature made available by the appellant and the jurisdictional officer. The question that arises whether we can rely upon the literature published by the appellant describing the product as a tool for classification of the product. For this proposition of law we find support to the tool used by us in classification of the products in the judgment delivered by Hon. Bombay High Court in case of M/s. Kulkarni Black and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphlets are certainly one of the relevant circumstance which can be taken into consideration while determining classification. Furthermore, we have also observed that presence of micronutrient in the product manufactured by the applicant will not alter the essential character vis-a-vis classification of the product under HSN. For this proposition of law also we find support in the judgment of the Hon. Supreme Court in case Ranadey Micronutrients Pvt. Ltd., 1996 (87) ELT 19 (SC) = 1996 (9) TMI 124 - SUPREME COURT that overruled the decision of Tribunal in the said case (Ranadey Micronutrients Pvt. Ltd. Vs Collector -1995 (75) ELT 139 Tribunal) = 1993 (6) TMI 182 - CEGAT, NEW DELHI. 07. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-02/2019-20/B-101 Mumbai, dt. 26-08-2019 For reasons as discussed in the body of the order, the questions are answered thus - Question: - Classification of goods and GST rate applicability in the case of goods manufactured by us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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