TMI Blog2021 (10) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No. 1/2017-Integrated Tax (Rate) dated 28.06.2017 (as amended)? HELD THAT:- It is evident from the specifications for the products Zn-EDTA and Fe-EDTA given in the Fertilizer Control Order, 1985 that minimum percentage of Zinc is essential in the product Zn-EDTA and minimum percentage of Iron is essential in the product Fe-EDTA , besides some other requirements. However, in the specifications of these products given in the Fertilizer Control Order, 1985, no requirement of any of the fertilizing elements nitrogen, phosphorus or potassium has been mentioned. Therefore, it cannot be said that the products Zn-EDTA and Fe-EDTA contain at least one of the fertilizing elements nitrogen, phosphorus or potassium as an essential constituent , which is one of the prime requirements as per Chapter Note 6 of Chapter 31 of the CTA, 1975 to term a product as other fertilizer classifiable under heading 3105 of the CTA, 1975. The products Zn EDTA and Fe EDTA are covered under serial no. 1(g) of Part-A Schedule-I of the Fertilizer Control Order, 1985, which is for Micronutrients . As per the Explanatory Note of Chapter 31, even if the micronutrient preparations conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts are sold in 25 kgs. Packing in HDPE Bags; that the products Zn EDTA and Fe EDTA are covered under serial number 1(g) of Schedule 1, Part (A) of the Fertilizer (Control) Order, 1985; that these 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. The appellant also submitted that it is registered under the Fertilizer (Control) Order, 1985 with the Deputy Director of Agriculture (Extension), District Mehsana, Gujarat. 2. The appellant raised the following questions for advance ruling before the GAAR (i) Whether the products Zn EDTA (Zinc Ethylenediamine Tetra Acetic Acid) and Fe EDTA (Iron Ethylenediamine Tetra Acetic Acid) being supplied by the applicant are classifiable under Chapter Heading 2833, 2921, 3105 or 3808 or any other Chapter Heading of the Customs Tariff Act, 1962; (ii) Whether the products Zn EDTA (Zinc Ethylenediamine Tetra Acetic Acid) and Fe EDTA (Iron Ethylenediamine Tetra Acetic Acid) being supplied by the applicant are covered under S. No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter 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. The GAAR has considered the composition of the products and has observed that the appellant had submitted that the Nitrogen is contained in EDTA; that once the impugned products are delivered at the plant system, EDTA breaks out, resulting in release of nitrogen. In view thereof, the GAAR has concluded that the products in question are micronutrients and merit classification under Chapter sub-heading 3824 99 90. As regards the various decisions cited by the appellant, it has been observed by the GAAR that in those decisions, Hon ble CESTAT dealt with the dispute of the classification of micronutrients in Central Excise regime and hence, ratio of the same cannot be applied in GST regime. Accordingly, the GAAR, vide Advance Ruling No. GUJ/GAAR/R/79/2020 dated 17.09.2020 , has ruled as follows Answer 1 : The products, viz. Zn EDTA and Fe EDTA manufactured and supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been submitted that the aforesaid decisions have been accepted by the department on merit, as such the issue of classification of Micronutrient Fertilizers under Chapter Heading 3105 has attained finality. 4.4 The appellant has referred to the dictionary meaning of the term fertilizers relied upon by the GAAR and has submitted that its products contain zinc and nitrogen / iron and nitrogen; that zinc, iron and nitrogen are used in these products primarily for their plant nutrient content, therefore, the products Zn EDTA and Fe EDTA of the appellant satisfies all the requirements of the definition of Fertilizers relied upon by the GAAR. 4.5 As regards the not following of the decisions of the Hon ble CESTAT by the GAAR, the appellant has submitted that though the decisions cited by it were in Central Excise regime, the tariff entries, relevant Chapter Notes and Section Notes and the principles to be adopted for classification of the products were same under the Central Excise regime as they are under the Goods and Services Tax regime, therefore the decisions of the Hon ble CESTAT should not have been disregarded merely on the ground that the same were pertaining to Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EDTA contain Nitrogen as an essential constituent. It has been submitted that EDTA is used in the manufacture of chelated fertilisers Zn EDTA and Fe EDTA , as EDTA is the only permitted chelating agent in India under the Fertilizer (Control) Order 1985, as amended, promulgated by the Ministry of Agriculture, Government of India; that the Nitrogen is a constituent in EDTA and Zn EDTA / Fe EDTA cannot be manufactured without EDTA, hence Nitrogen is an essential constituent of the products Zn EDTA and Fe EDTA . 5.5 The appellant has submitted that the Chapter Note 6 of Chapter 31 requires that the product, to be covered under other fertiliser , should contain Nitrogen as an essential constituent, and not as a predominant constituent, giving essential character to the product. It has further been submitted that in the said Chapter Note, no minimum percentage of Nitrogen to be contained in the product to be classified as other fertiliser has been prescribed; that the only requirement is that the Nitrogen contained in the product should be an essential constituent. The appellant has relied upon the Order-in-Original No. 25/2005 of the Commissioner of Central Excise, Hy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as the Hon ble Supreme Court, different benches of the Hon ble Tribunal and different adjudicating authorities, have consistently held that the products similar to the products Zn EDTA and Fe EDTA of the appellant are classifiable under Chapter Heading 31.05 as other fertilisers , and the decisions of the Hon ble Tribunal have been accepted by the department on merit, the view which has held the field for more than 25 years, should not be unsettled. 5.7 The appellant has submitted that though the Customs Tariff has been followed in the GST, the decision in respect of relevant chapter notes and section notes and classification under Chapter Heading / Sub -heading / Tariff item rendered for Central Excise Tariff are equally applicable as the Customs Tariff and the Central Excise Tariff are similar. The appellant has relied upon the decision of the Hon ble Tribunal in the case of Jersyindia Ltd. [2001 (131) E.L.T. 434 (Tri. Del.)] in this regard. 5.8 The appellant has also relied upon the judgements of the Hon ble Gujarat High Court in the cases of Raymon Glues Chemicals [2000 (117) E.L.T. 29 (Guj.)] and General Foods Ltd. [2010 (258) E.L.T. A49 (Guj)] and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassification of the products Zn EDTA and Fe EDTA and the related issue is the applicable rate of Goods and Services Tax on these products. CLASSIFICATION OF THE PRODUCTS 9. The appellant has submitted that the product Zn EDTA contains Zinc 12%+, Nitrogen 6.9%, EDTA Acid, Salt and it has Ph level of 6 6.5 and the product Fe EDTA contains Iron 12%+, Nitrogen 6.5%, EDTA Acid, Salt and it has Ph level 6-6.5. The appellant has submitted that these products are classifiable under Chapter Heading 31.05 (Tariff Item 3105 90 90) as other fertilisers , whereas the GAAR has held these products are classifiable under Tariff Item 3824 99 90 of the CTA, 1975. 10.1 Chapter heading 3105 of the CTA, 1975 covers 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. 10.2 The appellant has claimed that the products under consideration fall under chapter heading 3105 of the CTA, 1975 as other fertilisers . The appellant has also referred to the dictionary meaning of the term fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) Lead (as Pb) per cent by weight, maximum 0.003 (v) Cadmium (as Cd) per cent by weight, maximum 0.0025 (vi) Arsenic (as As) per cent by weight, maximum 0.01 It is evident from the aforesaid specifications for the products Zn-EDTA and Fe-EDTA given in the Fertilizer Control Order, 1985 that minimum percentage of Zinc is essential in the product Zn-EDTA and minimum percentage of Iron is essential in the product Fe-EDTA , besides some other requirements. However, in the specifications of these products given in the Fertilizer Control Order, 1985, no requirement of any of the fertilizing elements nitrogen, phosphorus or potassium has been mentioned. Therefore, it cannot be said that the products Zn-EDTA and Fe-EDTA contain at least one of the fertilizing elements nitrogen, phosphorus or potassium as an essential constituent , which is one of the prime requirements as per Chapter Note 6 of Chapter 31 of the CTA, 1975 to term a product as other fertilizer classifiable under heading 3105 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1985 and their mixture (with or without N,P,K) as notified by the Central Government or a State Government would be appropriately classifiable under Heading No. 31.05 as Other Fertilisers . (iii) Thereafter, vide Circular No. 392/25/98-CX. dated 19-5-1998, CBEC inter-alia clarified that for the purpose of classification of micronutrients as `Other Fertilizers in Heading 31.05 CET, the scope of the term Other Fertilizers has to be determined in the light of Note 6 of Chapter 31 (iv) CBEC, vide Circular No. 1022/10/2016-CX, dated 6-4-2016, interalia clarified that 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 Central Excise Tariff.; that for classification under chapter 31, at least one of the elements, namely - nitrogen, phosphorus or potassium should be an essential constituent of the fertilizer as per chapter note 6 of chapter 31. It has been clarified at Para 5 of the said Circular as follows 5. Mixtures of micronutrients/multi-micronutrients with fertilisers are also manufactured and sold. They shall be classified according to their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rifying that Micronutrients and specifically Zn EDTA and Fe EDTA should be classified under heading 31.05 of the CTA, 1975, therefore those judgements are not applicable in the present case. 12.2 In the case of Commissioner of Central Excise, Hyderabad-IV Vs. Aries Agrovet Industries Ltd. [2017 (7) G.S.T.L. 317 (Tri.-Hyd.)] as well as Commissioner of Central Excise, Mumbai II Vs. Aries Agrovet Industries Ltd. [Order No. A/86615/2018], department proposed the classification of the Micronutrients under heading 38.08 of the Central Excise Tariff Act, 1985 (CETA, 1985), which was not found to be the correct classification of the said products by the Hon ble CESTAT. Therefore, the classification of the said products under heading 31.05 of the CETA, 1985, adopted by the assessee, was upheld by the Hon ble CESTAT. In the case of Shivashakthi Bio Planteec Ltd. Vs. CCE, Cus. ST, Hyderabad-I [2019 (20) GSTL 243 (Tri.-Hyd.) and in the case of Hindustan Agro Insecticides Vs. CCE ST, Guntur [Final Order No. A/31234-31236/2017] the Hon ble CESTAT has followed its earlier decision in the case of Aries Agrovet Industries Ltd. However, the issue in the present case is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturers which are registered under the Fertilizer Control Order, 1985 14.3 It is observed that Serial no. 1(g) of Part-A Schedule-I of the Fertilizer Control Order, 1985 covers different Micronutrients . As already discussed, the products Zn EDTA and Fe EDTA being supplied by the appellant are covered at entry 7 and 8 respectively of serial no. 1(g) of Part-A Schedule-I of the Fertilizer Control Order, 1985. Further, the appellant has submitted that it is a manufacturer of the said products for which it is registered by the Deputy Director of Agriculture (Extension), District Mehsana, Gujarat under the Fertilizer Control Order, 1985. 14.4 We, therefore hold that the products Zn EDTA and Fe EDTA being supplied by the appellant 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 issued under the GGST Act, 2017) attracting Goods and Services Tax @ 12% (CGST 6% + SGST 6%). 15. In view thereof, we confirm the Advance Ruling No. GUJ/GAAR/R/79/2020 dated 17.09.2020 to the extent it has been appealed, by holding that the products Zn EDTA and Fe EDT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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