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2023 (7) TMI 810 - AAR - GSTClassification of goods - rate of tax - Rapigro - to be classified under TI 3507 or under 31010099? - whether the product is a fertilizer as claimed by the applicant or a plant growth regulator? HELD THAT - CBIC s circular dated 6.4.2016, has clarified on classification of Fertilizers - the clarification states that fertilizers classified under chapter 31 may inter alia be minerals or chemical fertilizers - nitrogenous (CETH 3102), phosphatic (CETH 3103), potassic (CETH 3104) or fertilizers consisting of two or three of the fertilizing elements namely nitrogen, phosphorous and potassium. The chemical elements - nitrogen, phosphorus and potassium are also referred as macronutrients or primary fertilizer elements and are required in higher quantity by the plants. On going through the TI 3101, it is found that the description mentioned is of animal or vegetable fertilizer, whether mixed together or chemically treated, Guano, Other which includes animal dung, animal excreta others. The applicant has not specifically pointed out to us as to how the product Rapigro would fall under the description Others ie CTH 31010099. Moreover, at the cost of repetition, the applicant has failed to divulge as to what is the addition of other organic nutrients obtained through fermentation which is added by M/s. Sowbhagya to the vegetable protein to manufacture CPH Liquid. In the present era other than the classical PGRs various other new plant growth promoter/regulator/stimulator are discovered and are currently used by the farmer for increasing their yield/quality of their produce. As per the explanation of Circular, essential plant nutrients includes any primary nutrients viz nitrogen, phosphorus and potassium, secondary nutrients like calcium, magnesium and sulphur and micro nutrients like zinc, manganese, copper, iron, boron and molybdenum. On going through the analytical composition provided by the applicant refer para 2.4 we do not find any mention or inclusion of these secondary or micro nutrients. The circular dated 6.4.2016 clarifies that It may also be noted that notifications issued under FCO are not relevant for deciding classification under Central Excise Tariff . The averment therefore, that since they have applied and have been granted registration as a bio stimulant under FCO would not be the sole determining factor under the present proceedings. Both fertilizer and plant growth regulator are different. While a fertilizer promotes growth of the plant, a plant growth regulator on the other hand also stimulates plant growth. The plant growth regulator in-fact promotes/inhibits the growth by affecting the structure at the physiological level. Whereas fertilizers provide nutrients, - the plant growth regulator is an organic component which when applied in low concentration promotes, inhibits or qualitatively modifies plant growth. Plant growth regulator further helps plants in making efficient use of the nutrients for their growth. Plant growth regulators are classified under CETH 38.08 alongside other insecticides, fungicides, herbicides and disinfectants. In-fact plant growth regulator are even considered as pesticides in some parts of the world. The applicant has also relied upon the Order-in-Original No. 16/2006 (ADC) dated 30.10.2006 to further aver that since CPH liquid is classified under TI 3101, Rapigro which is manufactured using the said liquid should also fall under the same Tl. The argument lacks merit primarily because the OIO has been decided way back before issue of the CBIC s clarificatory circular dated 6.4.2016, which specifically deals with classification of products falling under fertilizer, plant growth promoter, etc. and going by the same we find that the product viz RAPIGRO is a plant growth regulator. Thus, the classification of Rapigro under the Customs Tariff Act, 1975 and under the Central Goods Services Tax Act, 2017 will be under 38089340, as a plant growth regulator - rate of tax applicable on Rapigro is 18% as per SI. No. 87, Schedule III, notification No. 1/2017-CT (Rate) dated 28.06.2017.
Issues Involved:
1. Classification of Rapigro under the Customs Tariff Act, 1975. 2. Classification of Rapigro under the Central Goods & Services Tax Act, 2017. 3. Rate of tax payable on Rapigro. Summary: Issue 1: Classification of Rapigro under the Customs Tariff Act, 1975 The applicant, Jivagro Limited, sought to classify Rapigro under CTH 31010099 as a fertilizer. They argued that Rapigro, being a bio-stimulant registered under the Fertilizer Control Order (FCO), should be considered a fertilizer. The applicant provided detailed reasoning, including the product's chemical composition and its registration as a bio-stimulant. However, the Authority found that Rapigro does not meet the criteria for classification under CTH 3101, as it does not fall within the descriptions provided for animal or vegetable fertilizers. The Authority noted that the product contains organic nutrients obtained through fermentation, which were not disclosed in detail by the applicant. Issue 2: Classification of Rapigro under the Central Goods & Services Tax Act, 2017 The Authority examined whether Rapigro could be classified under TI 3507 (Enzymes) or TI 3808 (Plant Growth Regulators). It was determined that Rapigro does not qualify as an enzyme under TI 3507. The Authority further analyzed the characteristics and technical literature of Rapigro, noting that it acts as a plant growth regulator by affecting the physiological processes of plants when applied in low concentrations. Consequently, the Authority concluded that Rapigro should be classified under TI 38089340 as a plant growth regulator. Issue 3: Rate of tax payable on Rapigro Based on the classification under TI 38089340, the applicable GST rate for Rapigro was determined to be 18% (9% CGST and 9% SGST) as per SI. No. 87, Schedule III, notification No. 1/2017-CT (Rate) dated 28.06.2017. Ruling: 1. The classification of Rapigro under the Customs Tariff Act, 1975, and the Central Goods & Services Tax Act, 2017, is under 38089340 as a 'plant growth regulator.' 2. The rate of tax applicable on Rapigro is 18% (9% CGST and 9% SGST).
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