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2021 (10) TMI 57 - AAAR - GSTClassification of goods - Zn EDTA (Zinc Ethylenediamine Tetra Acetic Acid) - Fe EDTA (Iron Ethylenediamine Tetra Acetic Acid) - classifiable under Chapter Heading 2833, 2921, 3105 or 3808 or any other Chapter Heading of the Customs Tariff Act, 1962? - applicability of 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) - whether the supply of products 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 Schedule 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)? 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 contain small amounts of fertilizing elements nitrogen, phosphorus and potassium, but not as essential constituents, the said products are excluded from Chapter 31 - the products Zn EDTA and Fe EDTA do not contain fertilizing elements nitrogen, phosphorus and potassium as an essential constituent. Thus, in view of the Chapter Note 6 of Chapter 31 of the CTA, 1975 and the Explanatory note of Chapter 31, it is held that the products Zn EDTA and Fe EDTA do not fall under Chapter heading 3105 of the CTA, 1975 as other fertilizer - the product Zn EDTA and Fe EDTA being supplied by the appellant are classifiable under heading 3824 / Tariff Item 3824 99 90 of the CTA, 1975. Applicable rate of GST - HELD THAT - 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 - 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%.
Issues Involved:
1. Classification of products 'Zn EDTA' and 'Fe EDTA' under Customs Tariff Act, 1962. 2. Applicability of specific Schedules and Serial Numbers under Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. 3. Impact of supply to recipients not registered under the Fertilizer Control Order, 1985 on tax applicability. Issue-wise Detailed Analysis: 1. Classification of Products 'Zn EDTA' and 'Fe EDTA': The appellant argued that 'Zn EDTA' and 'Fe EDTA' should be classified under Chapter Heading 3105 of the Customs Tariff Act, 1975, as "other fertilizers" due to their nitrogen content. However, the GAAR observed that for classification under Chapter Heading 3105, the essential constituent must be nitrogen, phosphorus, or potassium. The GAAR concluded that the products in question are "micronutrients" and classified them under Chapter sub-heading 3824 99 90 as chemical products not elsewhere specified or included. The appellant cited previous CESTAT decisions classifying similar products under Chapter Heading 3105, but the GAAR noted these were under the Central Excise regime and not applicable in the GST regime. 2. Applicability of Specific Schedules and Serial Numbers: The GAAR ruled that the products 'Zn EDTA' and 'Fe EDTA' are covered under Sl. No. 56 of Schedule-II of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, attracting GST @ 12%. The appellant contended that these products should be classified under Chapter Heading 3105, attracting a lower GST rate of 5% under Sr. No. 182D of Schedule-I. However, the appellate authority upheld GAAR's ruling, confirming the classification under heading 3824 and the applicability of Sl. No. 56 of Schedule-II, thus attracting a GST rate of 12%. 3. Impact of Supply to Non-Registered Recipients: The GAAR answered in the negative regarding the impact of supplying products to recipients not registered under the Fertilizer Control Order, 1985, on the applicability of the specific Schedules and Serial Numbers under Notification No. 1/2017-Central Tax (Rate). The appellate authority did not find any reason to deviate from this ruling. Findings: The appellate authority considered the appellant's submissions, the GAAR's ruling, and other evidence. They acknowledged the delay in filing the appeal due to the appellant's initial misunderstanding of the appeal provisions and the impact of the COVID-19 pandemic, thus condoning the delay. Classification of the Products: The appellate authority reiterated that for a product to be classified under Chapter Heading 3105 as "other fertilizers," it must contain nitrogen, phosphorus, or potassium as an essential constituent. The specifications in the Fertilizer Control Order, 1985, do not mention these elements as essential constituents for 'Zn EDTA' and 'Fe EDTA'. Therefore, these products do not meet the criteria for classification under Chapter Heading 3105. Instead, they are classified under heading 3824 as chemical products not elsewhere specified or included, based on the essential character given by zinc and iron, respectively. Applicable Rate of Goods and Services Tax: The appellate authority confirmed that the products 'Zn EDTA' and 'Fe EDTA' are covered under Sl. No. 56 of Schedule-II of Notification No. 1/2017-Central Tax (Rate), attracting GST @ 12%. They upheld the GAAR's ruling, confirming the classification under heading 3824 and the applicability of the specified schedule and serial number. Conclusion: The appellate authority confirmed the GAAR's ruling that the products 'Zn EDTA' and 'Fe EDTA' are classifiable under heading 3824 (Tariff Item 3824 99 90) and are covered under Sl. No. 56 of Schedule-II of Notification No. 1/2017-Central Tax (Rate), attracting GST @ 12%.
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