9911796707
TMI Blog2021 (1) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... l). They do chemical treatment with Gypsum (for neutralization) and Ammonium Sulphate (for neutralization). (ii) "Bio- Fertilizers"- Rhizobium, Azotobacter, Azospirillum, Phosphate solubilizing bio-fertilizer, Mycorrhizal bio-fertilizer, Potassium Mobilizing bio-fertilizer, Zinc solubilizing bio-fertilizer, Acetobacter, Carrier based Consortia, Liquid Consortia, Gypsum (Carrier Material), Bentonite Mineral (Carrier Material) and Dolomite (Carrier Material). (iii) "Granulated Nutrient Mixture"- Ammonium Sulphate, Urea, Gypsum, Bentonite Mineral, Humic Acids, Amino acids, Biofulvic, Potassium and Humate. (iv) "Phosphatic Rich Fertilizers"- Gypsum, Rock Phosphate, SSP & Di-ammonium Phosphate (DAP). 2.1 The applicant has also furnished the list of production equipment and machines and Fertilizer production line working flowchart. 2.3 At present, they are classifying their products, "Organic Manure", "Bio-fertilizers" and "Granulated Nutrient Mixture" under Chapter 31 under tariff item 3101 and 3102. Further, they proposed to manufacture "Phosphatic Rich Fertilizers" classifying the same under Chapter 31 in tariff item 3103. But they are not sure whether the classification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 manufacturing of other complex fertilizers for agricultural use (soil or crop fertilizers) falling under Heading 3102, 3103, 3104 and 3105, will attract 5% GST [S. No. 182A to 182D of the First Schedule to the Notification No. 1/2017-C.T. (Rate), dated 28.06.2017], as the phrase "other than clearly to be used as fertilizers" would not cover such fertilizers that are used for making complex fertilizers for use as soil or crop fertilizers. However, the fertilizers items falling under the above mentioned headings, which are clearly not to be used as fertilizers 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 09.08.2018- 2018 (15) G.S.T.L.C23]. 3.5 Since, in the Notification No. 01/2017-C.T. (Rate), dated 28.06.2017 as amended further vide Notification No. 01/2017-C.T. (Rate), the goods manufactured by them is specifically classified in Tariff item 3101, 3102 and 3103 of the Schedule I- 2.5%, their product should be classified under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lizers Bio-Fertilizers Nitrogenous Mixture Fertilizers Mixture Fertilizers * Poultry Manure * Organic Ash * Compost * Cow Dung * Bone Meal * Vegetable Waste * Sulphur Powder (Mineral) * Rock Phosphate (Mineral) * Bentonite (Mineral) * Gypsum (for neutralization) * Bio-Culture Amino Acid * Bio-Fulvic and * Potassium Humate * Lignite/Coal Powder * Organic Manure * Bone Meal * Amino Acids * Bio-Fulvic * Potassium Humate * Rock Phosphate * Rhizobium * Azotobacter * Azospirillum * Phosphate solubilizing bacteria * Mycorrhizal bio-fertilizers * Potassium Mobilizing bio-fertilizer * Zinc solubilizing bio-fertilizer * Acetobacter * Carrier based Consortia * Gypsum (Carrier Material) * Bentonite Mineral (Carrier Material) * Dolomite (Carrier Material) * Phosphate Solubilising * Fungal Bio-fertilizer * Ammonium Sulphate * Urea * Gypsum * Bentonite * Amino Acids * Bio-fulvic * Potassium Humate * Urea * DAP * MOP * Gypsum * Rock Phosphate * Ammonium Sulphate * Bentonite * Dolomite * Amino Acids * Bio-Fulvic * Potassium Humate * Poultry and Organic Ash 4.3.3 The applicant further submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. 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 supply normal air so as to further increase the strength of granules. After cooling, the conveyor belt sends the granules to vibrating screen. 7. Screening Process: In the process of screening, the qualified materials can be sent to packaging machine by conveyor, while others are conveyed back to crusher or granulator to be re-processed. 8. Coating: After granules are manufactured, they do coating of different types of Bio-Fertilizers as per FCO, 1985 guidelines. In process of coating, cylindrical drum rotates and granules are fed and spray of required Bio-Fertilizer as per requirement is done. 5. The applicant has further submitted that issue is that at present the firm is manufactures and classifies Organic Fertilizers under tariff item 3101 of Chapter 31, Bio-fertilizers under tariff item 3101 of Chapter 31, Nitrogenous Mixture Fertilizers under tariff item 3102 of Chapter 31 and Mixture Fertilizers under tariff item 3105 of Chapter 31. But the firm is not sure whether the classification of the products done by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 goods described in (a) or (b) above mixed with chalk, gypsum or other inorganic non-fertilising substances; (d) liquid fertilisers consisting of the goods of sub-paragraph (a)(ii) or (viii) above, or of mixtures of those goods, in an aqueous or ammoniacal solution." (d) Mixture of Fertilizer: Mixture of fertilizer is classified under HSN 31059090 as it as a mixture of fertilizer containing Nitrogen, Phosphorus, Potassium and Organic Content Entry at HSN Code 3105 in the Schedule I of rate of GST on Goods: Following products can be classified under Heading 3105 - "Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertiliser:" Mixture of Fertilizer contains two or three of the fertilising elements nitrogen, phosphorus and potassium and are classified under HSN Code 3105. Provisions of law and notifications:- 7.2 Provisions of Notification No.1/2017 - Central Tax (Rate) dated 28th June, 2017 read as under: G.S.R. (E).- In exercise of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 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 fertilisers put up in unit containers and bearing a brand name 182A 3102 Mineral or chemical fertilisers, nitrogenous, other than those which are clearly not to be used as fertilizers 182B 3103 Mineral or chemical fertilisers, phosphatic, other than those which are clearly not to be used as fertilizers 182C 3104 Mineral or chemical fertilisers, potassic, other than those which are clearly not to be used as fertilizers 182D 3105 Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers other fertilisers; goods of this Chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg; other than those which are clearly not to be used as fertilizers"; (ii) in Schedule II - 6%, serial numbers 66, 67, 68 and 69 and the entries relating thereto shall be omitted. 3. This notification shall come into force with effect from the 1st day of July, 2017." 7.3 Their Understanding and Interpretation are as under: Fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 applicant, Shri Avinash Poddar, Advocate, at the time of personal hearing held through Video Conferencing on 18.08.2020. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. 9.1 At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 10. The applicant has sought for advance ruling in respect of following question, as revised: "Classification of the "Organic Manure", "Bio-fertilizers", "Nitrogenous Mixture Fertilizer" and "Mixture Fertilizer" manufactured by them and its HSN code? " 11. On going through the submission given by the applicant, we find that they are engaged in the manufacture of the products viz. "Organic Manure", "Bio-fertilizers", "Nitrogenous Mixture Ferti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods 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 Notification reads as under: (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. 13. Before deciding the correct classification of the products in question, it is necessary to analyse characteristics of fertilizer, organic fertilizer, bio fertilizer, plant growth regulator as well as those of the products being manufactured by the applicant in order to decide whether the products are fertilizers as claimed by the Applicant or otherwise. 14. As the above expressions have not been defined in the GST Law or the notification issued thereunder, we refer to meanings assigned to them in the dictionary. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. (d) Plant Growth Regulators: Plant growth regulators (also called plant hormones) are composition of numerous chemical substances that profoundly influence the growth and differentiation of plant cells, tissues and organs. Plant growth regulators function as chemical messengers for intercellular communication. There are currently five recognized groups of plant hormones: Auxins, Gibberellins, Cytokinins, Abscisic acid (ABA) and Ethylene. They work together coordinating the growth and development of cells. Ethylene is mainly involved in abscission and flower secscence in plants and is rarely used in plant tissue culture. In addition to the five principal growth regulators, two other groups sometimes appear to be active in regulating plant growth, the brassinoster ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eutralization) and Ammonium Sulphate (for neutralization). The applicant is proposing to classify Organic Manure under Chapter 3101. Sub-heading No. 3101 which falls under the Chapter-31 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), reads as under: "3101 ANIMAL OR VEGETABLE FERTILISERS, WHETHER OR NOT MIXED TOGETHER OR CHEMICALLY TREATED; FERTILISERS PRODUCED BY THE MIXING OR CHEMICAL TREATMENT OF ANIMAL OR VEGETABLE PRODUCTS 3101 00 - Animal or vegetable fertilisers, whether or not mixed together or chemically treated; fertilisers produced by the mixing or chemical treatment of animal or vegetable products : 3101 00 10 --- Guano ---- Other : 3101 00 91 ---- Animal dung 3101 00 92 ---- Animal excreta 3101 00 99 ---- Other". The above heading clearly indicates that the fertilisers should be produced by mixing or chemical treatment of animal or vegetable products. The ingredients used for manufacture of 'Organic Fertilisers' or the composition of the said product has been specified by the applicant as Poultry Manure, Organic Ash, Compost, Cow Dung, Bone Meal, Vegetable Waste, Sulphur Powder (Mineral), Rock Phosphate (Mineral), Bentonite (Mineral), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation finds support in the technical definition of the term 'Organic Fertilisers' as available on Wikipedia and which reads as under: Organic fertilizers are fertilizers derived from animal matter, animal excreta (manure), human excreta, and vegetable matter (e.g. compost and crop residues.) Naturally occurring organic fertilizers include animal wastes from meat processing, peat, manure, slurry, and guano. In contrast, the majority of fertilizers used in commercial farming are extracted from minerals (e.g., phosphate rock) or produced industrially (e.g., ammonia). The definition in the trade parlance also clearly indicates that Organic Fertilisers are solely obtained from animal or vegetable matter and no other ingredients are present in the said fertilisers. In the instant case, the composition of the 'Organic Fertilisers' as provided by the applicant reveals that it is a mixture of various elements and as such the same should be examined in light of the fact whether the mixture consists of animal or vegetable products or otherwise. The above analysis of the individual ingredients of the product claimed to be 'Organic Fertilisers' indicates that the said is derived from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 00 - Mineral or chemical fertilisers containing the two fertilizing elements phosphorus and potassium 3105 90 - Other : 3105 90 10 --- Mineral or chemical fertilisers containing two fertilizing elements namely nitrogen and potassium 3105 90 90 --- Other" 18. On going through the entry of the above product in the Notification No.01/2017-Central Tax(Rate) dated 28.06.2017, we find that the same appears at Entry No.182D of Schedule-I (on which the effective rate of GST is 5% (2.5% SGST + 2.5% CGST), which reads as under: Schedule I - 2.5% S.No. Chapter/Heading/ Sub-heading/Tariff item Description of Goods 182D 3105 Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers other fertilisers; goods of this Chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg; other than those which are clearly not to be used as fertilizers In view of the above, looking to the composition of the product, it can be concluded that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, as per Vikaspedia, benefits of Bio-fertilisers are as under: "Bio-fertilisers are living microorganisms of bacterial, fungal and algal origin. Their mode of action differs and can be applied alone or in combination. * Biofertilizers fix atmospheric nitrogen in the soil and root nodules of legume crops and make it available to the plant. * They solubilise the insoluble forms of phosphates like tricalcium, iron and aluminium phosphates into available forms. * They scavenge phosphate from soil layers. * They produce hormones and anti metabolites which promote root growth. * They decompose organic matter and help in mineralization in soil. * When applied to seed or soil, bio-fertilizers increase the availability of nutrients and improve the yield by 10 to 25% without adversely affecting the soil and environment." As can be seen from the above definitions, animal fertilizers and organic fertilizers are similar in definition whereas vegetable fertilizers are those obtained from vegetable matter like compost and crop residues. Further, these fertilizers are mixed directly in the soil and can improve the soil structure (aggregation) so that the soil holds more nutrient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d tetanus (DPT). 3002 20 22 ---- For diphtheria and tetanus (DT). 3002 20 23 ---- For measles, mumps and rubella (MMR). 3002 20 24 ---- For typhoid-paratyphoid (TAB) or typhoid paratyphoid-cholera (TABC) 3002 20 29 ---- Other. 3002 30 00 - Vaccines for veterinary medicine. 3002 90 - Other : 3002 90 10 --- Human blood. 3002 90 20 --- Animal blood prepared for therapeutic, prophylactic or diagnostic uses 3002 90 30 --- Cultures of micro-organisms (excluding yeast). 3002 90 40 --- Toxins. 3002 90 90 --- Other" 21. On going through the entry of the above product in the Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (hereinafter referred to as the said notification), we find that the same appears at Entry No.61 of Schedule-II (on which the effective rate of GST is 12% (6% SGST + 6% CGST), which reads as under: SCHEDULE II-6% S.No. Chapter/Heading/ Subheading / Tariff item Description of goods 61 3002 Animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; toxins, cultures of micro-organisms (excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LISERS, NITROGENOUS: 3102 10 00 - Urea, whether or not in aqueous solution - Ammonium sulphate; double salts and mixtures of ammonium sulphate and ammonium nitrate: 3102 21 00 -- Ammonium sulphate 3102 29 -- Other : 3102 29 10 --- Ammonium sulphonitrate 3102 29 90 --- Other 3102 30 00 - Ammonium nitrate, whether or not in aqueous solution 3102 40 00 - Mixtures of ammonium nitrate with calcium carbonate or other inorganic non-fertilising substances 3102 50 00 - Sodium nitrate 3102 60 00 - Double salts and mixtures of calcium nitrate and ammonium nitrate 3102 80 00 - Mixtures of urea and ammonium nitrate aqueous or ammoniacal solution 3102 90 - Other, including mixtures not specified in the foregoing sub-headings: 3102 90 10 --- Double salts or mixtures of calcium nitrate and magnesium nitrate 3102 90 90 --- Other" Further, Chapter Note 2 of the Chapter 31 of the Customs Tariff Act, 1975, reads as under: "2. Heading 3102 applies only to the following goods, provided that they are not put up in the forms or packages described in heading 3105: (a) goods which answer to one or other of the descriptions given below: (i) sodium nitrate, whether or not pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ypsum, Rock Phosphate, Ammonium Sulphate, Bentonite, Dolomite, Amino Acids, Bio-Fulvic, Potassium Humate, Poultry and Organic Ash. 24.1 We are required to find out whether the product, "Mixture of Fertilizer" manufactured by the applicant fall under the Sub-heading 31059090 as claimed by the applicant or otherwise. Sub-heading No.3105 which falls under the Chapter-31 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), reads as under: "3105 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. 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 - A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he solution with ammonia, adding potassium salts and finally evaporating to dryness. (This fertiliser is sometimes improperly referred to as potassium nitrophosphate, but is not a separate chemically compound.) (3) Both mixing and chemical process. It should be noted that headings 31.02, 31.03 and 31.04 include fertilisers containing as impurities very small quantities of a fertilising element other than the specified in the respective heading (nitrogen, phosphorus or potassium); such goods should not therefore be regarded as compound or complex fertilisers classifiable in this heading. (C) All other fertilisers (other than separate chemically defined compounds), for example: (1) Mixture of fertilising substances ( i.e. those containing nitrogen, phosphorus or potassium) with non-fertilising substances, e.g. sulphur. Many of those containing nitrogen or phosphorus are classified in heading 31.02 or 31.03 (see the Explanatory Notes to those headings) but the others are classified in this heading. (2) Natural potassic sodium nitrate fertiliser, a natural mixture of sodium nitrate and potassium nitrate. (3) Mixtures of animal or vegetable fertilisers with chemical or miner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (Rate) dated 28.06.2017, as amended. (II) The goods, viz. "Bio-fertilizers" manufactured and supplied by the applicant are classifiable under Chapter sub-heading No.30029030 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and will be taxable under GST @ 12% (6% SGST +6% CGST) in terms of Sl. No.61 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended. (III) The goods, viz. "Nitrogenous Mixture Fertilizers" manufactured and supplied by the applicant are classifiable under Chapter sub-heading No.31029090 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. 182A of Schedule I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended. (IV) The goods, viz. 'Mixture of Fertilizers' manufactured and supplied by the applicant are 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. 182 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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