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TMI Blog2021 (1) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the normal growth and development of plants. As on today, iron (Fe), manganese (Mn), zinc (Zn), copper (Cu), boron (B), molybdenum (Mo), nickel (Ni) and chlorine (Cl) are included in this category. These elements are also called minor or trace elements, but this does not mean that they are less important than macronutrients. These micronutrients are sold in the market as `micronutrient fertilizer supplying one or more of the eight essential nutrients listed above, namely iron to chlorine. However, in the trade parlance sale of micronutrients as micronutrient fertilizers would not lead to classification thereof under chapter 31 as fertilizers for the purposes of GST. For classification under chapter 31, at least one of the elements, namely- nitrogen (N), phosphorus (P) or potassium (K) should be an essential constituent of the fertilizer as per chapter note 6 of chapter 31 - Further, there is no specific heading in the tariff for classification of micronutrients. However, where the micronutrient is a separate chemically defined compound, it will be classifiable under the heading for that chemically defined compound under chapter 28 or chapter 29. For example, some of the sulph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he First Schedule to the Customs Tariff Act, 1975. Applicable rate of GST - HELD THAT:- The micronutrients products, viz. Zn EDTA and Fe EDTA manufactured and supplied by the applicant are covered under Sl. No.7 8 of 1(g) of Schedule I (Micronutrients), Part-A of the Fertilizer Control Order, 1985, as amended and the Applicant is also registered under the Fertilizer Control Order, 1985. Under GST, the micronutrients classifiable under Chapter 28 or 38, which are covered under serial number1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985 and are manufactured by the manufacturers which are registered under the Fertilizer Control Order, 1985 are covered under Sl. No. 56 of Schedule-II of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended), and corresponding Notifications issued under the GGST Act, 2017 and IGST Act, 2017 - the products, viz. Zn EDTA and Fe EDTA manufactured and supplied by the applicant are classifiable under HSN 3824 and are covered under Entry at Sl.No.56 of Schedule-II of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 as amended, on which total rate of GST chargeable is 12%. The applicant has further contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985, as amended. Copy of said Schedule is enclosed. 5. The Applicant is registered under the Fertilizer Control Order, 1985. A Copy of Registration Certificate issued to the applicant by the Deputy Director of the Agriculture (Extension), District Mehsana, Gujarat under the Fertilizer Control Order, 1985 is also submitted by them. 6. The said products are used as fertilizer to overcome zinc deficiency and iron deficiency respectively, in plants as well as a source of zinc and iron respectively for those plants which require zinc and/or iron for their normal growth and higher yields. 7. In respect of classification of 'Micronutrient' under the erstwhile Central Excise regime, the Central Board of Excise and Customs (CBEC, now Central Board of Indirect Taxes and Customs-CBIC) issued clarification under various instructions/circulars, as follows: (i) It was clarified, vide instructions contained in CBEC's Circular No. 26/90-CX.3, dated 26-06-1990, that 'micro-nutrients' would be appropriately classifiable under heading No.38.08 as 'plant growth regulator'. (ii) After consultation with the Ministry of Agriculture and the Chief Chemist, CRCL (Central Revenue Control Laboratory) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 3105 or 3808 or any other Chapter Heading of the Customs Tariff Act, 1962? (ii) Whether the said products, `Zn EDTA' and 'Fe EDTA' being supplied by the applicant are covered under 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)? and (iii) Whether the supply of the products, `Zn EDTA' and 'Fe EDTA' 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 the Schedules of the 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), as determined under question No.(ii) above, on supply of such`Zn EDTA' and 'Fe EDTA'. If yes, what would be the correct S. No. and Schedule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation regulator. Used also as a mordant in dyeing and in the electrolytic production of copper or zinc." 9.3 Though the Chapter Heading 2833 covers Zinc Sulphate and Ferrous Sulphate, in the understanding of the applicant, the said Chapter Heading covers separate chemically defined compound. Therefore, 'Zn EDTA' and Fe EDTA', products being manufactured and supplied by the applicant may not be covered by Chapter Heading 2833 as these products are not separate chemically defined compound in as much as the product 'Zn EDTA' also contains around 6.9% Nitrogen and the product 'Fe EDTA' also contains around 6.5% Nitrogen. B. Chapter Heading 2921 10.1 Chapter Heading 2921 falls under Sub-Chapter IX Covering 'Nitrogen Function Compound' of Chapter 29. Chapter Heading 2921 covers "Amine-function compounds". Tariff Item 2921 21 00 covers "Ethylenediamine and its salts". 10.2 The relevant Explanatory Notes of Harmonised System of Nomenclature are as follows:- "Ethylenediamine(NH2.CH2.CH2.NH2). Caustic, colourless liquid with a faint ammoniacal odour; its salt" 10.3 The applicant submitted that Ethylenediamine is only one of the inputs used in manufacture of `Zn EDTA' and 'Fe EDTA'. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f classification of micronutrients, plant growth regulators, etc. In the first para itself, the circular acknowledges that the issue of classification of these items remain a disputed area in Central Excise. On the basis of opinion obtained from Indian Agricultural Research Institute (IAR1), Central Excise Tariff explanatory notes, nature, usage, etc., the C.B.E.&C. has clarified, inter alia, that micronutrients are essential nutrients and required in small quantities for the normal growth and development of plants containing elements like iron, Manganese, Zinc, Copper, Boron, Molybdenum, Nickel, etc.. Board has also acknowledged that these micronutrients are sold in the market as micronutrient fertiliser. It has, however, clarified that for classification under Chapter 31, at least one of elements viz. Nitrogen, Phosphorus or Potassium should be an essential constituent of the fertilizer. Board has also clearly differentiated plant growth regulators as "organic compound other than nutrients which effect the physiological process of growth and development in plants". Board has further clarified, in para 6 therein, that itspast circulars on the subject, viz. dated 21-11-1994 and 19- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gen is not an essential constituent so as to classify the goods under Chapter 31. However, we note that the International Institute of Biotechnology and Toxicology (IIBT) has certified on 19-12-2006 that during the process of supply of potential micronutrients for the plant growth, once the micronutrients are delivered at the plant system EDTA breaks out resulting in elemental nitrogen which further helps to promote the plant growth and that without nitrogen, it is not possible to deliver the metal ions or micronutrients to the plant system. This certificate was placed by the appellants before the authorities below. Further, reliance placed by the Revenue on the specific exclusion of separate chemically defined compounds from Heading 3105.90 in the HSN Explanatory Notes (the EDTA chelate is separate chemically defined compound) is also misplaced for the reason that HSN Explanatory Notes to Chapter 29 clearly state that separate chemically defined compound containing other substances deliberately added during or after their manufacture are excluded from Chapter 29 and the product in dispute contains zinc/manganese/iron which is deliberately added. In the light of the above discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are appropriately classifiable under Chapter Heading 3105 in the understanding of the applicant, the said goods would be covered by S. No. 182D of Schedule-I of the Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) and corresponding Notifications issued under GGST Act, 2017 and IGST Act, 2017. B. S. No. 56 of Schedule-II: 14.1 Sr. No. 56 of Schedule-II 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.1/9017-Integrated Tax (Rate) dated 28.06.2017 (as amended) reads as follows: SCHEDULE II-6% S.No. Chapter/Heading/ Subheading/Tariff item Description of goods 56. 28 or 38 Micronutrients, which are covered under serial number1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985 and are manufactured by the manufacturers which are registered under the Fertilizer Control Order, 1985. 14.2 In case, it is held that the products, 'ZN EDTA' and 'Fe EDTA' being manufactured and supplied by the applicant are appropriately classifiable under Chapter 28 or 38 would be covered by S. No.56 of Schedule-II of the Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No.1/2017-Central Tax (Rate) is applicable to those goods falling under Chapter Heading 3105, "which are clearly not to be used as fertilizers". Thus, to be covered by this S. No., the products should be such which are clearly not to be used as fertilizers. However, it is pertinent to note that S. No. 45 of Schedule-III do not cast any responsibility on the supplier to ensure end use of the product. Therefore, this S. No. would not be applicable to those goods of Chapter Heading 3105, which are generally used as fertilizers but some of the buyers may use it as other than fertilizers. 16. APPLICANT'S UNDERSTANDING ON SUPPLY OF PRODUCTS TO THE RECIPIENTS NOT REGISTERED UNDER THE FERTILIZERS CONTROL ORDER, 1985: A. Classification under Chapter Heading 3105: 16.1 The goods falling under Chapter Heading 3105 are covered under two different S. Nos. of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) and corresponding Notifications issued under the GGST Act, 2017 and the IGST Act, 2017, as follows: SCHEDULE-I S.No. Chapter/Heading/ Subheading / Tariff item Description of goods 182D 3105 Mineral or chemical fertilizers containing two or three fertilizi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifications issued under the GGST Act, 2017 and IGST Act, 2017, as follows: SCHEDULE-II S.No. Chapter/Heading/ Subheading / Tariff item Description of goods 56. 28 or 38 Micronutrients, which are covered under serial number1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985 and are manufactured by the manufacturers which are registered under the Fertilizer Control Order, 1985. 17.2 It is to submit that in order to be covered by S. No. 56 of Schedule-II of the aforesaid Notifications, the products should be- (i) micronutrients [Iron (Fe), Manganese (Mn), Zinc (Zn), Copper (Cu), Boron (B), Molybdenum (Mo), Nickel (Ni) and Chlorine (Cl)] are included in the category of micronutrients, as clarified by CBEC vide Circular No.1022/10/2016-CX dated 06.04.2016); (ii) covered under serial number1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985; and (iii) manufactured by the manufacturers, which are registered under the Fertilizer Control Order, 1985. There is no other requirement or condition which is required to be fulfilled to be eligible to be covered by said serial number. 17.3 It is to submit that in case it is held that the products `Zn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral tax, Central Excise & Service Tax, Medchal Commissionerate, vide Order No.15/2020 (RTI) dated 27.08.2020 (copy enclosed), has, inter alia informed as follows:- (i) The Final Order No. A/30767-30768/2017 dated 19.06.2017 in Appeal Nos. E/125-126/2007 in the case of Commissioner of Central Excise & Service Tax, Hyderabad-IV Versus Aries Agrovet Industries Ltd. has been accepted on merits in review by the Commissioner, Medchal Commissionerate on 19.07.2020 and concurrence for acceptance of the above Final Order was accorded by the Chief Commissioner, Hyderabad Zone, vide letter C. No.131/2017-CC(HZ)Rev-CE-Med-Con dated 31.07.2017. (ii) In the case of Shivshakthi Bio Planteec Ltd. Versus Commissioner of Central Excise, Customs & Service Tax, Hyderabad-I, (a) Final Order No. A/3048-30483/2018 dated 31.01.2018 in Appeal Nos. E/27052, 27061/2013 and 22958-22959/2014,to the extent of classification of product has been accepted. reported at 2019(20) G.S.T.L.243(Tri.-Hyd.)]. (b) ----- (c) ------. (D) It is evident from the above that the aforesaid decisions of the Hon'ble CESTAT, classifying the Micronutrient Fertilizers under Chapter Heading 3105, have been accepted by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght by the applicant, relevant facts & the applicant's interpretation of law. 19.1 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. 20. The applicant has sought for advance ruling in respect of following questions: (i) Whether the product 'Zn EDTA' (Zinc Ethylenediamine Tetra Acetic Acid) and 'Fe EDTA' (Iron Ethylenediamine Tetra Acetic Acid) Acetic Acid) being supplied by the applicant are classifiable under Chapter Heading 2833, 2921, 3105 or 3808 or any other Chapter Heading of the Customs Tariff Act, 1962? (ii) Whether the products, `Zn EDTA' and 'Fe EDTA', being supplied by the applicant are covered under 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 Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 prescribing the rates of Central 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, Explanations (iii) and (iv) of the said Notification read 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. 25. Before deciding the correct classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primarily in regulating seed germination, including storage protein synthesis and modulating water stress. In plant tissue culture, it is used to help somatic emryogenesis, particularly during maturation and germination; Ethylene is a simple gaseous hydrocarbon with the chemical structure H2C=CH2. Ethylene is apparently not required for normal vegetative growth. However, it can have a significant impact on development of root and shoots. Usually, ethylene is not used in plant tissue culture. Difference between Fertilizers and Plant Growth Regulators: The fertilizers provide chemical elements which are essential to the plant for tissue growth whereas Plant Growth Regulators are chemical substances that are required in small quantities but profoundly influence differentiation of plant cells, tissues and organs. Thus, the plant growth 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. 27. We further note that Micronutrients are essential nutrients that are required in small qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld, thus, be noted that PGRs are different from nutrients, be it macronutrient or micronutrient. PGR as a substance is specifically covered under HSN 3808. More specifically, Plant Growth Regulators are covered under tariff item 3808 9340. 27.4 We further note that Fertilizers are classified under chapter 31 of the Customs Tariff and for this purpose they may, inter alia, be minerals or chemical fertilizers nitrogenous (CTH 3102), phosphatic (CTH 3103), potassic (CTH 3104) or fertilizers consisting of two or three of the fertilizing elements namely nitrogen, phosphorous and potassium; other fertilizers (CTH 3105). For the purpose of classification of any product as "other fertilizers", chapter note 6 of Chapter 31 is relevant which provides that the term "other fertilizers" applies only to products of a kind used as fertilizers and contain, as an essential constituent, at least one of the elements nitrogen, phosphorus or potassium. It is quite clear that for any product to merit classification under CTH3105 as other fertilizers, the product must have nitrogen or phosphorus or potassium or their combination as an essential constituent providing the essential character to the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nitrogen 6.9% &EDTA Acid Salt and 'Fe EDTA' contains Iron 12%+, Nitrogen 6.5% &EDTA Acid Salt. The applicant further submitted that the said Nitrogen is contained in EDTA. Once the 'Zn EDTA' and 'Fe EDTA' are delivered at the plant system, EDTA breaks out, resulting in release of nitrogen. 28.2 In view of the above, we conclude that the products, viz. Zinc Ethylenediamine Tetra Acetic Acid (Zn EDTA-Chelate Zinc as Zinc EDTA) and Iron Ethylenediamine Tetra Acetic Acid (Fe EDTA-Chelate Iron as Fe. EDTA) are 'micronutrients' and merits classification under Chapter sub-heading 3824 99 90 of the First Schedule to the Customs Tariff Act, 1975. 29. Having decided the classification, the next issue to be decided is of the applicable rate of GST on products in hand. We find that the micronutrients products, viz. "Zn EDTA" and "Fe EDTA" manufactured and supplied by the applicant are covered under Sl. No.7 & 8 of 1(g) of Schedule I (Micronutrients), Part-A of the Fertilizer Control Order, 1985, as amended and the Applicant is also registered under the Fertilizer Control Order, 1985. Under GST, the 'micronutrients' classifiable under Chapter 28 or 38, which are covered under serial number1( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 'Fe EDTA' by the applicant to the recipient, who is not registered under the Fertilizer Control Order, 1985, will have no impact on the applicability of particular S. No. of the Schedules of the 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), as there is no such condition prescribed in said entry under said notifications. 33. In light of the above discussions, we rule as under - R U L I N G Question 1: Whether the product 'Zn EDTA' (Zinc Ethylenediamine Tetra Acetic Acid) and 'Fe EDTA' (Iron Ethylenediamine Tetra Acetic Acid) Acetic Acid) being supplied by the applicant are classifiable under Chapter Heading 2833, 2921, 3105 or 3808 or any other Chapter Heading of the Customs Tariff Act, 1962? Answer: The products, viz. "Zn EDTA" and "Fe EDTA" manufactured and supplied by the applicant are classifiable under HSN 3824 99 90 of the First Schedule to the Customs Tariff Act, 1975. Question 2: Whether the products, `Zn EDTA' and 'Fe EDTA', being supplied by the applicant are covered under S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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