TMI Blog2021 (1) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... c (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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 Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Fertilizer Control Order, 1985, as amended. Copy of said Schedule is enclosed. 5. The Applicant is registered under the Fertilizer Control Order, 1985. A Copy of Registration Certificate issued to the applicant by the Deputy Director of the Agriculture (Extension), District Mehsana, Gujarat under the Fertilizer Control Order, 1985 is also submitted by them. 6. The said products 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. 7. In respect of classification of Micronutrient under the erstwhile Central Excise regime, the Central Board of Excise and Customs (CBEC, now Central Board of Indirect Taxes and Customs-CBIC) issued clarification under various instructions/circulars, as follows: (i) It was clarified, vide instructions contained in CBEC s Circular No. 26/90-CX.3, dated 26-06-1990, that micro-nutrients would be appropriately classifiable under heading No.38.08 as plant growth regulator . (ii) After consultation with the Ministry of Agriculture and the Chief Chemist, CR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt are classifiable under Chapter Headings 2833, 2921, 3105 or 3808 or any other Chapter Heading of the Customs Tariff Act, 1962? (ii) Whether the said products, `Zn EDTA and Fe EDTA being supplied by the applicant are covered under S. No. 182D of Schedule-I, S. No. 56 of Schedule-II, S. No. 40, 45 or 87 of Schedule-III, or any other S. No. of any of the Schedules of 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)? and (iii) Whether 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 any 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 determined under question No.(ii) above, on supply of such`Zn EDTA and Fe EDTA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd turns brown on exposure to air: the action of heat transforms them into white anhydrous sulphate. Aqueous solutions are green but turn brownish on exposure to air. Ferrous sulphate is used for preparing inks (iron inks), colours (Prussian blue), and the mixture (with slaked lime and sawdust) used for purifying coal gas; in dyeing; as a disinfectant, an antiseptic and a herbicide. (b) Ferric sulphate (Fe2 (S04)3). Prepared from ferrous sulphate. Powder or as brownish slabs. Very soluble in water, with which it forms a white hydrate (with 9 H20). Used for purifying natural waters or sewage, for coagulating blood in slaughterhouses, in iron-tanning and as a fungicide. As it lessens the buoyancy of ores, it is used as a floatation regulator. Used also as a mordant in dyeing and in the electrolytic production of copper or zinc. 9.3 Though the Chapter Heading 2833 covers Zinc Sulphate and Ferrous Sulphate, in the understanding of the applicant, the said Chapter Heading covers separate chemically defined compound. Therefore, Zn EDTA and Fe EDTA , products being manufactured and supplied by the applicant may not be covered by Chapter Heading 2833 as these products are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iron for their normal growth and higher yields. Therefore, the products Zn EDTA and Fe EDTA satisfy all the requirements of being classified as other fertilizers under Chapter Heading 3105 in terms of Chapter Note 6 of Chapter 31 of the Customs Tariff Act, 1975. 11.4 Hon ble CESTAT had occasion to examine the proper classification of micronutrient in the case of Commissioner of Central Excise and Services Tax Hyderabad-IV Versus Aries Agrovet Industries Ltd., reported at 2017 (7) G.S.T.L. 317 (Tri.-Hyd.). In this case, after referring to various Circulars issued by the CBEC, Hon ble CESTAT held as follows: 8.6 It is interesting to note that C.B.E.C. found it necessary to issue yet one more Circular No. 1022/10/2016-X, dated 6-4-2016, on the very issue of classification of micronutrients, plant growth regulators, etc. In the first para itself, the circular acknowledges that the issue of classification of these items remain a disputed area in Central Excise. On the basis of opinion obtained from Indian Agricultural Research Institute (IAR1), Central Excise Tariff explanatory notes, nature, usage, etc., the C.B.E. C. has clarified, inter alia, that micronutrients ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a chelating agent and also contains nitrogen, zinc, manganese and iron. There is no dispute that it is used as a fertilizer. As per Note 6 to Chapter 31 of the CETA, 1985, the term other fertilizers applies only to products of a kind used as fertilizers containing, as an essential constituent (emphasis applied) at least one of the fertilizing elements nitrogen, phosphorus and potassium. The department has relied upon clarificationissued by the Regional Fertilizer Control Laboratory, Chennai under cover of letters dated 30-10-2006 and 4-1-2007 that the products are micronutrient fertilizers under the Fertilizer Control Order and incidentally contained small quantities of nitrogen because of the chemical composition and cannot be claimed as primary source of nitrogen, to hold that nitrogen is not an essential constituent so as to classify the goods under Chapter 31. However, we note that the International Institute of Biotechnology and Toxicology (IIBT) has certified on 19-12-2006 that during the process of supply of potential micronutrients for the plant growth, once the micronutrients are delivered at the plant system EDTA breaks out resulting in elemental nitrogen which further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.1 Sr. No. 182D of Schedule-I of 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), reads as follows: SCHEDULE I-2.5% S.No. Chapter/Heading/ Subheading / Tariff item Description of goods 182D 3105 Mineral or chemical fertilizers containing two or three fertilizing elements nitrogen, phosphorus and potassium; other fertilizers; goods of this chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 Kgs.; [other than those which are clearly not to be used as fertilizers] 13.2 As already submitted, the products, viz. ZN EDTA and Fe EDTA being manufactured and supplied by the applicant are appropriately classifiable under Chapter Heading 3105 in the understanding of the applicant, the said goods would be covered by S. No. 182D of Schedule-I of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45. 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. which are clearly not to be used as fertilizers. 87. 3808 Insecticides, rodent icicles, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products other than bio-pesticides mentioned against S. No. 78A of schedule-II. 15.2 In the understanding of the applicant, even if the products, ZN EDTA and Fe EDTA are held to be classifiable under Chapter 28, 29 or 38, the same would be specifically covered by S. No.56 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended), as already submitted above, and therefore these products would not be covered by S. No. 39, 40 or 87 of Schedule-III of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) and corresponding Notifications issued under the GGST Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. No. 45 of Schedule-III of aforesaid Notifications provides for end use based exemption. The wordings which are clearly not to be used as fertilizers are applicable to those products which are not used as fertilizers in normal course. Both the S. No. 182D of Schedule-I and S. No. 45 of Schedule III of the aforesaid Notifications are product specific and not transaction specific. Therefore, once the products Zn EDTA and `Fe EDTA being manufactured and supplied by the applicant are found to be covered under S. No. 182D of Schedule-I of aforesaid Notifications, the same would not cease to be covered by the said S. No. merely because a particular buyer/recipient is not registered under the Fertiliser Control Order, 1985. In fact, there is no such condition under the aforesaid Notifications specifying that the goods should be supplied to buyers registered under the Fertiliser Control Order, 1985 so as to be eligible to be covered by S. No. 182D of Schedule-I of the said Notification. 16.3 Therefore, 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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. 18. At the time of personal hearing held through Video Conferencing on 17.08.2020, the Authorised Representative of the applicant, Shri Rahul Bhatt, reiterated the facts as stated in the Application as mentioned herein above. 18.1 Further, they, vide their letter dated 28.08.2020, have submitted the additional submission as under: (A) They have relied upon the decision of the Hon ble CESTAT in the case of Commissioner of Central Excise Service Tax, Hyderabad-IV Versus Aries Agrovet Industries Ltd. [Final order No. A/30767-30768/2017 dated 19.06.2017 in Appeal Nos. E/125-126/2007 reported at 2017 (7) G.S.T.L.317 (Tri.-Hyd.)], wherein the Hon ble Tribunal, inter alia considered various Circulars, including Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Fe as FE-EDTA=12% . Both these products have been held by the Hon ble Tribunal to be correctly classifiable under CETH 31.05. The copies of product information literature of CHELAMIN and CHELAFER available on the website of Aries Agrovet Industries Ltd. have already been submitted. (F) The Advance Ruling sought by the applicant before the authority is in respect of the products Zn EDTA and Fe EDTA manufactured by the applicant. The product Zn EDTA manufactured by the applicant contain Zinc 12%+, Nitrogen-6.9%, EDTA acid, Salt and it has Ph Level of 6-6.5. The product Fe EDTA manufactured by the applicant contain Iron 12%+, Nitrogen-6.5%, EDTA acid, Salt and Ph Level 6-6.5. Thus, the product Zn EDTA manufactured by the applicant is similar to the product CHELAMIN and the product Fe EDTA manufactured by the applicant is similar to the product CHELAFER, in respect of which the Hon ble Tribunal has already held that the correct classification is under CETH 31.05, which has already attained finality in as much as the said decision have been accepted by the department on Merit. (G) In view thereof, the applicant has requested to kindly consider holding the corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 30.06.2017 (as amended) and Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 (as amended), as determined under question No.(ii) above. If yes, what would be the correct Sl. No. and Schedule of aforesaid Notification No. in case of supply of products, `Zn EDTA and Fe EDTA by the applicant to the recipient, who is not registered under the Fertilizer Control Act, 1985? 21. Thus, in the instant case, moot points to be decided are the classification of the products, viz. Zn EDTA and Fe EDTA and 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. 22. Ongoing through the submission given by the applicant, we find that they 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meanings assigned to them in the Dictionary. 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. Plant Growth Regulators : Plant growth regulators (also called plant hormones) are composition of numerous chemical substances that profoundly influence the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... `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. 27.1 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. 27.2 We further note that Plant Growth Regulators are defined as organic compounds other than nutrients that affect the physiological processes of growth and development in plants when applied in low concentration. Plant growth regulators are active at low concentrations in promoting, inhibiting or mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. 27.6 Further, Mixtures of micronutrients/multi-micronutrients with fertilisers shall be classified according to their essential characters and general rules for interpretation of the schedule to the tariff. Where the essential constituent giving character to the mixture is one or more of the three elements namely Nitrogen, Phosphorous or Potassium, the mixture shall be classified under any of the heading of Chapter 31, depending upon its composition. On the other hand, where the essential character of the product is that of mixture of micronutrients/multi-micronutrients having predominately trace elements, it shall be classified under CTH 3824 99 90 as chemical products not elsewhere specified or included, which reads as under 3824 PREPARED BINDERS FOR FOUNDRY MOULDS OR CORES; CHEMICAL PRODUCTS AND PREPARATIONS OF THE CHEMICAL OR ALLIED INDUSTRIES (INCLUDING THOSE CONSISTING OF MIXTURES OF NATURAL PRODUCTS), NOT ELSEWHERE SPECIFIED OR INCLUDED 3824 99 -- Other: --- Ammoniacal gas liquo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the GGST Act, 2017 and IGST Act, 2017, as follows: SCHEDULE-II-6% S.No. Chapter/Heading/ Subheading / Tariff item Description of goods 56. 28 or 38 Micronutrients, 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. 29.1 In view of the above, we hold that 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% (6% SGST +6% CGST). 30. We have also perused the Case Laws cited by the applicants, viz. (i) Commissioner of Central Excise and Services Tax Hyderabad-IV Versus Aries Agrovet Industries Ltd., reported at 2017 (7) G.S.T.L. 317 (Tri.-Hyd.) and CIBA India Ltd. Versus Commissioner of Customs, Chennai, reported at 2009 (237) E.L.T. 207 (Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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)? Answer : The products, `Zn EDTA and Fe EDTA , being supplied by the applicant are covered under Sl. No. 56 of Schedule-II of 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), attracting GST @ 12% (6% SGST +6% CGST). Question 3: Whether 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 any 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 determined under question No.(ii) above. If yes, what would be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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