2023 (12) TMI 191 - AT - Customs

Classification of imported goods - EDTA Zinc 12% - to be classified under CTH 3105 9090, with exemption from CVD vide Notification No. 04/2006-CE dated 01.03.2006 or it would fall under CTH 2921 2100 and thereby, not entitled to the CVD exemption, by considering the said product as Ethylenediamine and its salts ? Whether the product in question can be considered as separate chemically defined compound as Revenue is arguing or otherwise? - HELD THAT - From the manufacturing process, as well as expert opinion, it is apparent that Nitrogen is added deliberately in the process simultaneously, along with Zinc Oxide, as also EDTA acid. Therefore, Nitrogen is not an in situ development rather it is part of the manufacturing process and Nitrogen remains in the product even after the reaction is over, as confirmed by the test report of the final product. Therefore, even if it is a micronutrient or plant growth regulator essential for providing Zn, since it also contains fertilizing element i.e., Nitrogen also, it would be more appropriately classifiable as other fertilizers . Whether nitrogen is used as fertilizer or otherwise or whether it is intended to be used as fertilizer or otherwise? - HELD THAT - Admittedly, it is an agriculture grade product, where the Revenue has also provided the IS standard meant for agriculture grade Zinc-EDTA. IS standard for chelated Zinc for agricultural use (IS 13921 1994), inter alia, provides for certain minimum requirements of Zinc i.e., 12% which is satisfied in this case. Similarly, the Fertilizer (Control) Order also classifies chelated Zinc i.e., Zn-EDTA, as micronutrient, where the minimum content should be 2%. Therefore, when the chelated Zinc is treated as fertilizer or micronutrient and when the same is also having other fertilizing component like Nitrogen in substantial proportion (here 6.5%), this needs to be classified as micronutrient fertilizer or other fertilizer in terms of Chapter Note 6 to Chapter 31. The Commissioner (Appeals) had rightly decided the classification of EDTA Zinc 12% under CTH 3105 9090. Accordingly, there are no merit in interfering with the Impugned Order - appeal dismissed.

Summary

Issues involved:
The main issue in this appeal is whether the product EDTA Zinc 12% should be classified under CTH 3105 9090 with exemption from CVD or under CTH 2921 2100, based on whether it is considered a separate chemically defined compound or a fertilizer.

Classification of Product:
The Respondent imported EDTA Zinc 12% classified under CTH 3105 9090, while the Department classified it under CTH 2921 2100, denying CVD exemption. The Commissioner (Appeals) held that EDTA Zinc 12% is classifiable under CTH 3105 9090, entitled to exemption. He noted the deliberate addition of Zinc and Nitrogen during manufacturing, leading to classification as a fertilizer under Chapter 31.

Revenue's Appeal:
The Revenue argued that EDTA Zinc 12% is a separate chemically defined compound, a coordination compound covered under CTH 2922 4990. They cited US Trade Commissioner ruling and Harmonized Tariff Schedule, claiming the product's chemical formula as C10H12ZnN2Na2O8. They contended Nitrogen in EDTA is not an essential constituent for classification under CTH 3105.

Manufacturing Process Analysis:
The Respondent detailed the manufacturing process involving EDTA acid, ZnO, and NaOH, resulting in a product with Zinc (12% minimum) and Nitrogen (5.4% minimum). Expert opinions confirmed deliberate addition of Zinc and Nitrogen to aid nutrient uptake in plants. Certificates supported the product's nature as a mixture beneficial for plant growth.

Legal Precedents and Classification:
Various judgments were cited to support classification under Chapter 31 as fertilizer, emphasizing the deliberate addition of nutrients for plant growth. The Tribunal analyzed Chapter 29 and Chapter 31 provisions, concluding that the product, containing Zinc and Nitrogen, should be classified as "other fertilizers" due to its intended use and composition.

Conclusion:
The Commissioner (Appeals) correctly classified EDTA Zinc 12% under CTH 3105 9090 as a fertilizer, considering its composition, production process, and intended use. The Tribunal found no merit in the Revenue's appeal and dismissed it, upholding the initial classification decision.

*(Operative part of the Order was pronounced in the Open Court)*