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TMI Blog2021 (1) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... arbon (C), hydrogen (H), oxygen (O), and nitrogen (N), although other elements are found in the side chains of certain amino acids. Thus, the presence of nitrogen in the product is visible. Further, it contains Potassium Humate and as such the presence of potassium is also visible. Rock Phosphate which is also one of the components of the product is a non-detrital sedimentary rock that contains high amounts of phosphate minerals. Thus, the product also contains phosphate elements. In addition, the product contains minerals viz. Sulphur Powder and Bentonite. Thus, it is seen that the product is a mixture of animal or vegetable products, minerals, nitrogen, phosphate and potassium - the product merits classification under Tariff Item No. 31059090-Other , of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers , it will be covered under Entry at Sl. No.182D of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5%. Bio-fertilizers - HELD THAT:- The entire portion of the description of goods except cultures of micro-organisms (excluding ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5%. X X X X Extracts X X X X X X X X Extracts X X X X ..... from the description of the goods shown in Entries at Sl. No. 182, 182A & 182B of the Schedule I of the Notification No.1/2017-Central Tax (Rate) dated 30.06.2017 as amended, it is clear that all the components are used in manufacturing of said products, as mentioned in para 2 above and, therefore, as per their understanding, their products, viz. "Organic Manure", "Bio-fertilizers", "Granulated Nutrient Mixture" and "Phosphatic Rich Fertilizers" are to be classified under Chapter Headings 3101, 3101, 3102 and 3103, respectively. 3.3 The applicant further submitted that Bio-fertilizers or Organic Manure is classifiable under tariff heading 3101 and when it is other than those put up in unit container and bearing a brand name would attract nil rate of duty but when Bio-fertilizer is put up in unit container and bearing a brand name, it would be taxable under GST @ 5%- In Re: Rhizo Organic- -2018 (14) G.S.T.L.600 (A.A.R.-GST) = 2018 (7) TMI 965 - AUTHORITY FOR ADVANCE RULINGS, RAJASTHAN. 3.4 The applicant further submitted that Fertilizers supplied for use in manufacture of other fertilizers attract GST @ 5%- Fertilizers supplied for use as fertilizers, or supplied for use in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult-oriented products for the overall growth of farmers and ultimately the growth of firm. Firm is also certified by Organic Certifying agencies so as to provide Organic fertilizers to the farmers who are seeking for 100% Organic Certified Inputs. The Firm distributes its products through the network of Agro dealers. Looking at importance of market needs, the firm thought it appropriate to enlarge its market base keeping the potential of different areas in mind. The Firm has many Agro dealers and distributors in Maharashtra, Gujarat, Madhya Pradesh and Rajasthan. Business process of Manufacturing fertilizers: 4.3.1 The applicant has further submitted that at present the firm is engaged in manufacturing of different types of fertilizers namely Organic Fertilizers, Bio-fertilizers, Nitrogenous Mixture Fertilizers and Mixture of Fertilizer. The firm is having license for selling of fertilizers. 4.3.2 The applicant further submitted the details of composition or ingredients of above fertilizers, as under: Organic Fertilizers Bio-Fertilizers Nitrogenous Mixture Fertilizers Mixture Fertilizers * Poultry Manure * Organic Ash * Compost * Cow Dung * Bone Meal * Vegetabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als in that particular composition are send from the feeding hopper to the crushing process. 3. Crushing Process: The lump materials should be grinded before the granulating process. But we can leave out crushing process when the compost material is fine enough. Then the conveying belt sends the materials to granulation drum. 4. Granulator Drum: During granulating, there is a pump to offer spray and water pump to offer water and makes powder particles or fertilizer particles form easily. The solid powder after granulating will rise by the rotation of the cylinder and scroll down under the effect of gravity. After several times repetition of the same rotation, fertilizer materials gradually form. Next the conveying belt sends the materials to rotary drum drying machine and cooling machine. 5. Drier Drum: In this process, drier drum rotates and there is coal furnace to supply hot air to drying machine so as to increase the strength of granules and also to remove the contamination after granulation from granulator drum. After drying, the conveyor belt sends the granules to cooling drum. 6. Cooler Drum: In this process, the cooler drum rotates and there are draught fans to supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogenous Mixture Fertilizers: Nitrogenous mixture fertilizers are classified under HSN Code 31029090 as they are manufactured by mixing Ammonium Sulphate, Urea with Gypsum and accordingly are nitrogenous fertilizers. Entry at HSN Code 3102 in the Schedule I of rate of GST on Goods: Following products can be classified under Heading 3102 - Mineral or chemical fertilisers, nitrogenous, other than those which are clearly not to be used as fertilizers: (a) goods which answer to one or other of the descriptions given below: (i) sodium nitrate, whether or not pure; (ii) ammonium nitrate, whether or not pure; (iii) double salts, whether or not pure, of ammonium sulphate and ammonium nitrate; (iv) ammonium sulphate, whether or not pure; (v) double salts (whether or not pure) or mixtures of calcium nitrate and ammonium nitrate; (vi) double salts (whether or not pure) or mixtures of calcium nitrate and magnesium nitrate; (vii) calcium cyanamide, whether or not pure or treated with oil; (viii) urea, whether or not pure. (b) fertilisers consisting of any of the goods described in (a) above mixed together; (c) fertilisers consisting of ammonium chloride or of any of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... *182D 3105 Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers *S. No. 182A and 182D are inserted by Notification No.18/2017-Central Tax (Rate), dated 30-06-2017, w. e. f. 01-07-2017, Provisions of the same read as under: "In exercise of the powers conferred by sub-section (1) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.1/2017- Central Tax (Rate), dated the 28th June, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 673 (E) dated the 28th June, 2017,namely:- 2. In the said notification,- (i) in Schedule I - 2.5%, after serial number 182 and the entries relating thereto, the following serial numbers and entries shall be inserted, namely:- Schedule I - 2.5% S.No. Chapter/Heading/ Sub-heading/ Tariff item Description of Goods 182 3101 All goods i.e. animal or vegetable fertilisers or organic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zers that are used for making complex fertilizers for use as soil or crop fertilizers. However, the fertilizers items falling under the abovementioned headings, which are clearly not to be used as fertilizer attract 18% GST [S. No. 42 to 45 of the schedule-III to the Notification No. 1/2017-C.T. (Rate)]. - C.B.I. & C. Circular No. 54/28/2018-GST, dated 9-8- 2018 - 2018 (15) G.S.T.L. C23. 7.6 Since, in the Notification No. 01/2017-Central Tax (Rate) amended further vide Notification No. 18/2017-Central Tax (Rate) the goods manufactured by us is specifically classified in tariff item 3101,3102 and 3105 of Schedule I - 2.5%, their products should be classified under this chapter heading only. 8. At the time of personal hearing held through Video Conferencing on 18.08.2020, the Authorised Representative of the applicant, Shri Avinash Poddar, Advocate, reiterated the facts as stated in the Application and mentioned herein above. DISCUSSION & FINDINGS: 9. We have considered the submissions made by the applicant in their application revised on 15.08.2020 for advance ruling, additional submission dated 24.08.2020 as well as oral submission made by the Authorised Representative of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no Acids * Bio-Fulvic * Potassium Humate * Poultry and Organic Ash 12. In order to determine the classification and tax liability on the supply of the products, "Organic Manure", "Bio-fertilizers", "Nitrogenous Mixture Fertilizer" ("Granulated Nutrient Mixture") & "Mixture Fertilizer" ("Phosphatic Rich Fertilizers") by the applicant and to decide as to whether these products are correctly classifiable under Sub-heading nos. 3101, 3101, 3102 & 3105, respectively, as requested by the applicant, we will be required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the sub-headings as well as the rates of Central Tax GST applicable to various goods which are covered under 6 schedules as under: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI Further, Explanation (iii) and (iv) of the said Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertilizers: Bio fertilizer is a substance which contains living micro organisms which, when applied to the seed, plant surfaces or soil colonizes the rhizosphere or the interior of the plant and promotes growth by increasing the supply or availability of primary nutrients to the host plant. Bio-fertilizers add nutrients through the natural processes of nitrogen fixation, solubilizing phosphorus, and stimulating plant growth through the synthesis of growth-promoting substances. Major types and source of Bio fertilizers are:- a. Rhizobium is a bacterium living in the root of leguminous plants in symbiotic association. The root cells of leguminous plant contain a purple coloured pigment called leghemoglobin in which the bacteria float to fix atmospheric nitrogen. b. Azospirillum lipoferum is another bacterium which lives in loose association with some grasses, rice, maize and rice. c. Azotobacter, Clostridium, Aerobacter, Methanobacterium are free living bacteria which fix atmospheric nitrogen. d. The leaves of Azolla (an aquatic pteridophyte) have large number of plants of Anabaena (a blue green algae) which have the capacity to fix atmospheric nitrogen which is made availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antities but profoundly influence differentiation of plant cells, tissues and organs. Thus, the plant regulators are triggers that decide the timing of tissue differentiation into shoots, roots, branches, leaves, flowers and seeds in their life cycle just as hormones decide the timing of appearance and maturation of various organs in the animal life cycle. 15. Keeping in mind the discussion made herein above with respect to fertilizer, organic fertilizer, bio fertilizer, plant growth regulator, we shall now move on to discuss each product separately and further to classify them accordingly. "ORGANIC MANURE" 16. "Organic Manure"- As per the applicant, Organic Manure/Fertilizer is obtained from animal sources such as animal manure or plant sources like green manure. It contains Poultry Manure, Organic Ash, Compost, Cow Dung, Bone Meal, Vegetable Waste, Sulphur Powder (Mineral), Rock Phosphate (Mineral), Bentonite (Mineral), Bio-Culture Amino Acid, Bio-Fulvic and Potassium Humate. They do chemical treatment with Gypsum (for neutralization) and Ammonium Sulphate (for neutralization). The applicant is proposing to classify Organic Manure under Chapter 3101. Sub-heading No. 3101 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve indicates that Potassium Humate is a chemically synthesised element which is extracted from brown coal and the process involves alkaline reaction. The ingredient viz. Bio-Fulvic is also commercially known as Bio Potassium Fulvate and the same has been defined on the website https://bariteworld.com/humic-acid-humate/bio-fulvic-acid as under: Bio potassium fulvate is not a pure molecular compound, but a heterogeneous complex macromolecular structure and composition of the extremely complex mixture. 17. The above indicates that the ingredients viz. Sulphur Powder, Rock Phosphate and Bentonite, Gypsum, Potassium Humate and Bio-Fulvic are certainly not covered under the Animal or Vegetable products. For the product to be covered under Chapter head 3101 it is of vital importance that the product should necessarily be either direct animal or vegetable fertilisers such as 'manure' whether mixed together and chemically treated or otherwise and those obtained by mixing or chemical treatment of animal or vegetable products. The said interpretation finds support in the technical definition of the term 'Organic Fertilisers' as available on Wikipedia and which reads as under: Organic fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 3105 10 00 - Goods of this Chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg. 3105 20 00 - Mineral or chemical fertilisers containing the three fertilizing elements nitrogen, phosphorus and potassium 3105 30 00 - Diammonium hydrogen ortho phosphate (diammonium phosphate) 3105 40 00 - Ammonium dihydrogen ortho phosphate (monoammonium phosphate) and mixtures thereof with diammonium hydrogen orthophosphate (diammonium phosphate)" 3105 40 00 - Ammonium dihydrogen ortho phosphate (monoammonium phosphate) and mixtures thereof with diammonium hydrogen orthophosphate (diammonium phosphate) - Other mineral or chemical fertilisers containing the two fertilising elements nitrogen and phosphorus: 3105 51 00 -- Containing nitrates and phosphates 3105 59 00 -- Other 3105 60 00 - Mineral or chemical fertilisers containing the two fertilizing elements phosphorus and potassium 3105 90 - Other : 3105 90 10 --- Mineral or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obacter, Methanobacterium are free living bacteria which fix atmospheric nitrogen. d. The leaves of Azolla (an aquatic pteridophyte) have large number of plants of Anabaena (a blue green algae) which have the capacity to fix atmospheric nitrogen which is made available to Azolla. e. Many free living blue-green algae (Anabaena, Nostoc, Aulosira) fix atmospheric nitrogen. Nostoc is placed in the rice crop and provides nitrogen to rice. f. Mycorrhiza: It is the symbiotic relationship between roots of higher plants and fungi. Further, Vikaspedia defines "Bio fertilisers" as under: "In nature, there are a number of useful soil micro organisms which can help plants to absorb nutrients. Their utility can be enhanced with human intervention by selecting efficient organisms, culturing them and adding them to soiled directly or through seeds. The cultured micro organisms packed in some carrier material for easy application in the field are called bio-fertilisers. Thus the critical input in Bio fertilisers is the microorganisms." Further, as per Vikaspedia, benefits of Bio-fertilisers are as under: "Bio-fertilisers are living microorganisms of bacterial, fungal and algal origin. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AL PRODUCTS, WHETHER OR NOT MODIFIED OR OBTAINED BY MEANS OF BIOTECHNOLOGICAL PROCESSES; VACCINES, TOXINS, CULTURES OF MICRO-ORGANISMS (EXCLUDINGYEASTS) AND SIMILAR PRODUCTS; 3002 10 - Antisera, other blood fractions and immunological products, whether or not modified or obtained by means of biotechnological processes: --- Antisera; 3002 10 11 ---- For diptheria 3002 10 12 ---- For tetanus 3002 10 13 ---- For rabies 3002 10 14 ---- For snake venom 3002 10 19 ---- Other 3002 10 20 --- Hemoglobin blood globulins and serum globulins --- Other : 3002 10 91 ---- Of human origin 3002 10 99 ---- Other 3002 20 - Vaccines for human medicine : --- Single vaccines : 3002 20 11 ---- For cholera and typhoid. 3002 20 12 ---- For hepatitis. 3002 20 13 ---- For tetanus. 3002 20 14 ---- For polio. 3002 20 15 ---- For tuberculosis. 3002 20 16 ---- For rabies. 3002 20 17 ---- For Japanese encephalitis. 3002 20 18 ---- For whopping cough (pertusis). 3002 20 19 ---- Other --- Mixed vaccines : 3002 20 21 ---- For diphtheria, pertusis and tetanus (DPT). 3002 20 22 ---- For diphtheria and tetanus (DT). 3002 20 23 ---- For measles, mumps and rubella (MMR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of GST chargeable is 12% (6% SGST +6% CGST). C. "Nitrogenous Mixture Fertilizers": 23. "Nitrogenous Mixture Fertilizers" ("Granulated Nutrient Mixture")- As per the applicant, the fertility status of a soil and crop often requires the application of more than one nutrient for the correction of nutritional disorders. So a mixed fertilizer is required to meet the requirements. It is a mixture of Ammonium Sulphate, Urea, Gypsum, Bentonite, Amino Acids and Bio-fulvic Potassium Humate. The applicant further stated that "Nitrogenous Mixture Fertilizers" are classified under HSN Code 31029090 as they are manufactured by mixing Ammonium Sulphate, Urea with Gypsum and, accordingly, are Nitrogenous fertilizers. 23.1 We are required to find out whether the product, "Nitrogenous Mixture Fertilizers" manufactured by the applicant fall under the Sub-heading 3102 as claimed by the applicant or otherwise. Sub-heading No. 3102 which falls under the Chapter-31 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), reads as under: "3102 MINERAL OR CHEMICAL FERTILISERS, NITROGENOUS: 3102 10 00 - Urea, whether or not in aqueous solution - Ammonium sulphate; double salts and mixtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than those which are clearly not to be used as fertilizers 23.3 In view of the above, looking to the composition of the product, Nitrogenous Mixture Fertilizers, it can be concluded that the product, "Nitrogenous Mixture Fertilizers" manufactured and supplied by the applicant consisting of Ammonium Sulphate and Urea mixed with Gypsum, Bentonite, Amino Acids and Bio-fulvic Potassium Humate and, hence, are classifiable under Tariff Item No.31029090- Other, of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers, it will be covered under Entry at Sl. No.182A of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5% (2.5% SGST +2.5% CGST). D. MIXTURE OF FERTILIZER: 24. The applicant further stated that the product, "Mixture of Fertilizer" is classified under HSN 31059090 as it is a mixture of fertilizers containing Nitrogen, Phosphorus, Potassium and Organic Content in as much as it contained Urea, DAP, MOP, Gypsum, Rock Phosphate, Ammonium Sulphate, Bentonite, Dolomite, Amino Acids, Bio-Fulvic, Potassium Humate, Poultry and Orga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined compounds not specified in headings 31.02 to 31.04 even if they would be used as fertilizers (e.g. potassium nitrate (heading 28.34), potassium phosphate (heading 28.35)). (B) Composite and complex fertilizers (other than separate chemically defined compounds), i.e. mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus or potassium. They are obtained by: (1) Mixing together two or more fertilising products (even if those products, taken alone, are not classified in headings 31.02 to 31.04). Such mixtures include: (a) Calcined natural phosphates and potassium chloride. (b) Superphosphates and potassium sulphate. (c) Calcim cynamide and basic slag. (d) Ammonium sulphate, superphosphates and potassium phosphate. (e) Ammonium nitrate, superphosphates and potassium sulphate or chloride. (2) Chemical processes, e.g. fertilisers obtained by treating natural calcium phosphates with nitric acid, removing the resulting calcium nitrate by cooling and centrifugation and, after separation, neutralising the solution with ammonia, adding potassium salts and finally evaporating to dryness. (This fertiliser is sometimes imprope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, Phosphorus, Potassium and Organic Content in the form of Urea, DAP, MOP, Gypsum, Rock Phosphate, Ammonium Sulphate, Bentonite, Dolomite, Amino Acids, Bio-Fulvic, Potassium Humate, Poultry and Organic Ash. Hence, the said product merits classification under Tariff Item No. 31059090-Other, of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers, it will be covered under Entry at Sl. No.182D of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5% (2.5% SGST +2.5% CGST). 25. In light of the foregoing discussion, we rule as under: RULING (I) The goods, viz. "Organic Manure" manufactured and supplied by the applicant, classifiable under Chapter sub-heading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers, it will be taxable under GST @ 5% (2.5% SGST +2.5% CGST) in terms of Sl. No. 182D of Schedule I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended. (II) The goods, viz. "Bio-fertilizers" manufactured and supplied by the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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