TMI Blog2021 (1) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... side chains of certain amino acids. Thus, the presence of nitrogen in the product is visible. Further, it contains Potassium Humate and as such the presence of potassium is also visible. Rock Phosphate which is also one of the components of the product is a non-detrital sedimentary rock that contains high amounts of phosphate minerals. Thus, the product also contains phosphate elements. In addition, the product contains minerals viz. Sulphur Powder and Bentonite. Thus, it is seen that the product is a mixture of animal or vegetable products, minerals, nitrogen, phosphate and potassium - the product merits classification under Tariff Item No. 31059090-Other , of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers , it will be covered under Entry at Sl. No.182D of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5%. Bio-fertilizers - HELD THAT:- The entire portion of the description of goods except cultures of micro-organisms (excluding yeasts) pertains to the medical field. On going through the said Sub-heading 3002, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of GST chargeable will be 5%. - GUJ/GAAR/R/71/2020 - - - Dated:- 17-9-2020 - SANJAY SAXENA AND MOHIT AGRAWAL MEMBER Present for the applicant : Shri Avinash Poddar, Advocate BRIEF FACTS: The applicant has filed an application dated 12.03.2020 for Advance Ruling, which was subsequently revised on 15.08.2020 and requested to consider the facts as per revised application. The facts stated in the original application are as below: ORIGINAL APPLICATION: 2. The applicant has stated that they are engaged in the manufacture of different types of fertilizers viz. Chemical fertilizers, Organic fertilizers and Bio- fertilizers. At present, they are manufacturing Organic Manure , Bio-fertilizers , Granulated Nutrient Mixture and Phosphatic Rich Fertilizers . They submitted the details of composition or ingredients of above fertilizers, as under: (i) Organic Manure - Poultry Manure, Organic Ash, Compost, Cow Dung, Bone Meal, Bio-culture, Sulphur Powder (Mineral), Rock Phosphate (Mineral) Bentonite (Mineral). They do chemical treatment with Gypsum (for neutralization) and Ammonium Sulphate (for neutralization). (ii) Bio- Fertilizers - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating device, for use as a fertilizing material. 3.2 The applicant further submitted that from the description of the goods shown in Entries at Sl. No. 182, 182A 182B of the Schedule I of the Notification No.1/2017-Central Tax (Rate) dated 30.06.2017 as amended, it is clear that all the components are used in manufacturing of said products, as mentioned in para 2 above and, therefore, as per their understanding, their products, viz. Organic Manure , Bio-fertilizers , Granulated Nutrient Mixture and Phosphatic Rich Fertilizers are to be classified under Chapter Headings 3101, 3101, 3102 and 3103, respectively. 3.3 The applicant further submitted that Bio-fertilizers or Organic Manure is classifiable under tariff heading 3101 and when it is other than those put up in unit container and bearing a brand name would attract nil rate of duty but when Bio-fertilizer is put up in unit container and bearing a brand name, it would be taxable under GST @ 5%- In Re: Rhizo Organic- -2018 (14) G.S.T.L.600 (A.A.R.-GST) = 2018 (7) TMI 965 - AUTHORITY FOR ADVANCE RULINGS, RAJASTHAN . 3.4 The applicant further submitted that Fertilizers supplied for use in manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t term gains. The prime objective of firm is to provide the maximum benefit possible to the farmers by developing new, cost-effective and result-oriented products for the overall growth of farmers and ultimately the growth of firm. Firm is also certified by Organic Certifying agencies so as to provide Organic fertilizers to the farmers who are seeking for 100% Organic Certified Inputs. The Firm distributes its products through the network of Agro dealers. Looking at importance of market needs, the firm thought it appropriate to enlarge its market base keeping the potential of different areas in mind. The Firm has many Agro dealers and distributors in Maharashtra, Gujarat, Madhya Pradesh and Rajasthan. Business process of Manufacturing fertilizers: 4.3.1 The applicant has further submitted that at present the firm is engaged in manufacturing of different types of fertilizers namely Organic Fertilizers, Bio-fertilizers, Nitrogenous Mixture Fertilizers and Mixture of Fertilizer. The firm is having license for selling of fertilizers. 4.3.2 The applicant further submitted the details of composition or ingredients of above fertilizers, as under: Organic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and crossability, raw materialising different percentage compositions are taken so different fertilizers can be manufactured as per requirement applicable for different requirements of soils and crops. 1. Composting and Treatment: Firstly, they mix different types of raw materials as per ratio required for composting and treatment. (only required for manufacture of Organic Fertilizers); 2. Feeding Hopper: After composting and chemical treatment, the composed raw material and other different types of raw materials are fed into hopper. Then, according to the technical requirements, the raw materials in that particular composition are send from the feeding hopper to the crushing process. 3. Crushing Process: The lump materials should be grinded before the granulating process. But we can leave out crushing process when the compost material is fine enough. Then the conveying belt sends the materials to granulation drum. 4. Granulator Drum: During granulating, there is a pump to offer spray and water pump to offer water and makes powder particles or fertilizer particles form easily. The solid powder after granulating will rise by the rotation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nure. (b) Bio-fertilizers: As per Fertilizer Control Order 1985, Bio-fertilizer means the product containing carrier based (solid or liquid) living microorganisms which are agriculturally useful in terms of nitrogen fixation, phosphorus solubilisation or nutrient mobilization, to increase the productivity of soil or crop. Entry at HSN Code 3101 in the Schedule I of rate of GST on Goods: Following products can be classified under Heading 3101- 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: Guano Animal dung Animal excreta Other (c) Nitrogenous Mixture Fertilizers: Nitrogenous mixture fertilizers are classified under HSN Code 31029090 as they are manufactured by mixing Ammonium Sulphate, Urea with Gypsum and accordingly are nitrogenous fertilizers. Entry at HSN Code 3102 in the Schedule I of rate of GST on Goods: Following products can be classified under Heading 3102 - Mineral or chemical fertilisers, nitrogenous, other than those which are clearly not to be used as fertilizers: (a) goods which ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) 0.125 per cent in respect of goods specified in Schedule VI appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on intra-State supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules. Schedule I 2.5% S. No. Chapter/Heading/ Sub-heading/ Tariff item Description of Goods 182 3101 All goods i.e. animal or vegetable fertilisers or organic fertilisers put up in unit containers and bearing a brand name *182A 3102 Mineral or chemical fertilisers, nitrogenous, other than those which are clearly not to be used as fertilizers *182D 3105 Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, 2017. 7.3 Their Understanding and Interpretation are as under: From the descriptions mentioned herein above, it is clear that all the components are used in manufacturing Organic Fertilizers, Bio-fertilizers, Nitrogenous Mixture Fertilizers and Mixture of Fertilizer as specified in Annexure-I and therefore as per our understanding the classification is 3101, 3101, 3102 and 3105 respectively under Chapter 31. 7.4 Further, Bio-fertilizers or Organic Fertilizer is classifiable under Tariff Heading 3101 and when it is put up in Unit Container and bearing a brand name would be covered under Schedule-I of rate of GST on goods attracting/attract nil rate of duty but when Bio-fertilizer is put up in Unit Container and bearing a brand name, it would be taxable under GST @ 5%- In Re : Rhizo Organic - 2018 (14) G.S.T.L.600 (A.A.R.-GST) = 2018 (7) TMI 965 - AUTHORITY FOR ADVANCE RULINGS, RAJASTHAN . 7.5 Fertilizers supplied for use in manufacture of other fertilizers at 5% GST rate. - Fertilizers supplied for direct use as fertilizers, or supplied for use in the manufacturing of other complex fertilizers for agricultural use (soil or crop fertilizers) falling under Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in the manufacture of the products viz. Organic Manure , Bio-fertilizers , Nitrogenous Mixture Fertilizer ( Granulated Nutrient Mixture ) Mixture Fertilizer ( Phosphatic Rich Fertilizers ), classifying the same under Chapter heading Nos. 3101, 3101, 3102 3105, respectively. The composition of each product as submitted by the applicant, is as below: Organic Fertilizers Bio-Fertilizers Nitrogenous Mixture Fertilizers Mixture Fertilizers Poultry Manure Organic Ash Compost Cow Dung Bone Meal Vegetable Waste Sulphur Powder (Mineral) Rock Phosphate (Mineral) Bentonite (Mineral) Gypsum (for neutralization) Bio-Culture Amino Acid Bio-Fulvic and Potassium Humate Lignite/Coal Powder Organic Manure Bone Meal Amino Acids Bio-Fulvic Potassium Humate Rock Phosphate Rhizobium Azotobacter Azospirillum Phosphate solubilizing bacteria Mycorrhizal bio-fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification. 13. Before deciding the correct classification of the products in question, it is necessary to analyse characteristics of fertilizer, organic fertilizer, bio fertilizer, plant growth regulator as well as those of the products being manufactured by the applicant in order to decide whether the products are fertilizers as claimed by the Applicant or otherwise. 14. As the above expressions have not been defined in the GST Law or the notification issued thereunder, we refer to meanings assigned to them in the dictionary. (a) Fertilizers: The term fertilizer means a material containing one or more of the recognized plant nutrients such as Nitrogen, Phosphorus and Potassium, Calcium, Sulphur, Iron, Magnesium, Zinc etc., which are used primarily for their plant nutrient content. Fertilizers are derived from a wide variety of natural and manufactured materials and are sold in solid, liquid and gaseous form (anhydrous ammonia). These materials are designed for use or claimed to have value in promoting plant growth or increasing plant-available nutrient levels in soils. (b) Organic Fertilizers: The word organic applied to fertilizers usually means that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiation 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 regulating plant growth, the brassinosteroids and polyamines. Auxins stimulate cell elongation and influence a host of other developmental responses, such as root initiation, vascular differentiation; Cytokinins are able to stimulate cell division and induce shoot bud formation. They usually act as antagonists to auxins, Cytokinins often inhibit embryogenesis and root induction; Gibberellins: The main effect of gibberellins in plants is to cause stem elongation and flowering. They are also prominently involved in mobilization of endosperm reserves during early embryo growth and seed germination; Abscisic acid (ABA) in plants is a terpenoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mixing or chemical treatment of animal or vegetable products : 3101 00 10 --- Guano ---- Other : 3101 00 91 ---- Animal dung 3101 00 92 ---- Animal excreta 3101 00 99 ---- Other . The above heading clearly indicates that the fertilisers should be produced by mixing or chemical treatment of animal or vegetable products. The ingredients used for manufacture of Organic Fertilisers or the composition of the said product has been specified by the applicant as Poultry Manure, Organic Ash, Compost, Cow Dung, Bone Meal, Vegetable Waste, Sulphur Powder (Mineral), Rock Phosphate (Mineral), Bentonite (Mineral), Gypsum (for neutralization), Bio-Culture Amino Acid, Bio-Fulvic and Potassium Humate. Of the said ingredients the ingredients viz. Poultry Manure, Compost, Cow Dung, Bone Meal are certainly within the scope of animal or vegetable products . However, the ingredients viz. Sulphur Powder, Rock Phosphate and Bentonite are admittedly minerals. Further, gypsum is also a mineral and the same has been defined at Wikipedia as under: Gypsum is a soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4 2H2O. It is widely mined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te rock) or produced industrially (e.g., ammonia). The definition in the trade parlance also clearly indicates that Organic Fertilisers are solely obtained from animal or vegetable matter and no other ingredients are present in the said fertilisers. In the instant case, the composition of the Organic Fertilisers as provided by the applicant reveals that it is a mixture of various elements and as such the same should be examined in light of the fact whether the mixture consists of animal or vegetable products or otherwise. The above analysis of the individual ingredients of the product claimed to be Organic Fertilisers indicates that the said is derived from a mixture of Animal Products, Vegetable Products, Minerals and chemically synthesised molecules. In other words, the product is not exclusively a mixture of animal or vegetable products but contains other ingredients which are not animal or vegetable products. Thus, the said product claimed to be Organic Fertiliser is not covered under the Chapter heading 3101 of the first schedule to the Custom Tariff Act. 17.1 The composition of the product contains Amino Acids (Bio-culture amino acids). The key elements of an ami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 5% (2.5% SGST + 2.5% CGST), which reads as under: Schedule I 2.5% S.No. Chapter/Heading/ Sub-heading/Tariff item Description of Goods 182D 3105 Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers other fertilisers; goods of this Chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg; other than those which are clearly not to be used as fertilizers In view of the above, looking to the composition of the product, it can be concluded that the product merits classification under Tariff Item No. 31059090-Other , of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers , it will be covered under Entry at Sl. No.182D of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5% (2.5% SGST +2.5% CGST). B. BIO-FERTILIZERS : 19. Now, we come to the classification of Bio fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of legume crops and make it available to the plant. They solubilise the insoluble forms of phosphates like tricalcium, iron and aluminium phosphates into available forms. They scavenge phosphate from soil layers. They produce hormones and anti metabolites which promote root growth. They decompose organic matter and help in mineralization in soil. When applied to seed or soil, bio-fertilizers increase the availability of nutrients and improve the yield by 10 to 25% without adversely affecting the soil and environment. As can be seen from the above definitions, animal fertilizers and organic fertilizers are similar in definition whereas vegetable fertilizers are those obtained from vegetable matter like compost and crop residues. Further, these fertilizers are mixed directly in the soil and can improve the soil structure (aggregation) so that the soil holds more nutrients and water, and therefore becomes more fertile. However, bio fertiliser consists of living micro-organisms which, when applied to seeds, plant surfaces, or soil, colonize the rhizosphere or the interior of the plant and promotes growth by increasing the supply or availability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid-cholera (TABC) 3002 20 29 ---- Other. 3002 30 00 - Vaccines for veterinary medicine. 3002 90 - Other : 3002 90 10 --- Human blood. 3002 90 20 --- Animal blood prepared for therapeutic, prophylactic or diagnostic uses 3002 90 30 --- Cultures of micro-organisms (excluding yeast). 3002 90 40 --- Toxins. 3002 90 90 --- Other 21. On going through the entry of the above product in the Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (hereinafter referred to as the said notification), we find that the same appears at Entry No.61 of Schedule-II (on which the effective rate of GST is 12% (6% SGST + 6% CGST), which reads as under: SCHEDULE II-6% S.No. Chapter/Heading/ Subheading / Tariff item Description of goods 61 3002 Animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; toxins, cultures of micro-organisms (excluding yeasts ) and similar products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TILISERS, NITROGENOUS: 3102 10 00 - Urea , whether or not in aqueous solution - Ammonium sulphate; double salts and mixtures of ammonium sulphate and ammonium nitrate: 3102 21 00 -- Ammonium sulphate 3102 29 -- Other : 3102 29 10 --- Ammonium sulphonitrate 3102 29 90 --- Other 3102 30 00 - Ammonium nitrate, whether or not in aqueous solution 3102 40 00 - Mixtures of ammonium nitrate with calcium carbonate or other inorganic non-fertilising substances 3102 50 00 - Sodium nitrate 3102 60 00 - Double salts and mixtures of calcium nitrate and ammonium nitrate 3102 80 00 - Mixtures of urea and ammonium nitrate aqueous or ammoniacal solution 3102 90 - Other, including mixtures not specified in the foregoing sub-headings: 3102 90 10 --- Double salts or mixtures of calcium nitrate and magnesium nitrate 3102 90 90 --- Other Further, Chapter Note 2 of the Chapter 31 of the Customs Tariff Act, 1975, reads as under: 2. Heading 3102 applies only to the following goods, provided that they are not put up in the forms or packages described in heading 3105: (a) goods which answer to one or other of the descriptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant further stated that the product, Mixture of Fertilizer is classified under HSN 31059090 as it is a mixture of fertilizers containing Nitrogen, Phosphorus, Potassium and Organic Content in as much as it contained Urea, DAP, MOP, Gypsum, Rock Phosphate, Ammonium Sulphate, Bentonite, Dolomite, Amino Acids, Bio-Fulvic, Potassium Humate, Poultry and Organic Ash. 24.1 We are required to find out whether the product, Mixture of Fertilizer manufactured by the applicant fall under the Sub-heading 31059090 as claimed by the applicant or otherwise. Sub-heading No.3105 which falls under the Chapter-31 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), reads as under: 3105 MINERAL OR CHEMICAL FERTILISERS CONTAINING TWO OR THREE OF THE FERTILISING ELEMENTS NITROGEN, PHOSPHORUS AND POTASSIUM; OTHER FERTILISERS; GOODS OF THIS CHAPTER IN TABLETS OR SIMILAR FORMS OR IN PACKAGES OF A GROSS WEIGHT NOT EXCEEDING 10 KG. 3105 10 00 - Goods of this Chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg. 3105 20 00 - Mineral or chemical fertilisers containing the three fertilizing elements nitrogen, phosphorus and potassi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osphates and potassium phosphate. (e) Ammonium nitrate, superphosphates and potassium sulphate or chloride. (2) Chemical processes, e.g. fertilisers obtained by treating natural calcium phosphates with nitric acid, removing the resulting calcium nitrate by cooling and centrifugation and, after separation, neutralising the solution with ammonia, adding potassium salts and finally evaporating to dryness. (This fertiliser is sometimes improperly referred to as potassium nitrophosphate, but is not a separate chemically compound.) (3) Both mixing and chemical process. It should be noted that headings 31.02, 31.03 and 31.04 include fertilisers containing as impurities very small quantities of a fertilising element other than the specified in the respective heading (nitrogen, phosphorus or potassium); such goods should not therefore be regarded as compound or complex fertilisers classifiable in this heading. (C) All other fertilisers (other than separate chemically defined compounds), for example: (1) Mixture of fertilising substances ( i.e. those containing nitrogen, phosphorus or potassium) with non-fertilising substances, e.g. sulphur. Many of those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total rate of GST chargeable will be 5% (2.5% SGST +2.5% CGST). 25. In light of the foregoing discussion, we rule as under: RULING (I) The goods, viz. Organic Manure manufactured and supplied by the applicant, classifiable under Chapter sub-heading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers , it will be taxable under GST @ 5% (2.5% SGST +2.5% CGST) in terms of Sl. No. 182D of Schedule I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended. (II) The goods, viz. Bio-fertilizers manufactured and supplied by the applicant are classifiable under Chapter sub-heading No.30029030 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and will be taxable under GST @ 12% (6% SGST +6% CGST) in terms of Sl. No.61 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended. (III) The goods, viz. Nitrogenous Mixture Fertilizers manufactured and supplied by the applicant are classifiable under Chapter sub-heading No.31029090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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