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TMI Blog2021 (10) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... sy application in the field are called bio-fertilisers. Thus the critical input in Biofertilisers is the microorganisms. On comparing the definition as well as the uses of Biofertilizers vis-a-vis Animal fertilier/organic fertilizer/vegetable fertilizer, it can be seen that Biofertilsers are completely distinct in nature and use to these fertilisers. In view of these facts, we conclude that biofertilisers are not covered under the Sub-heading 3101 of the First Schedule to the Customs Tariff Act, 1975(15 of 1975) - the entire portion of the description of goods except cultures of micro-organisms (excluding yeasts) pertains to the medical field. On going through the said Subheading 3002, it is seen that cultures of micro-organisms (excluding yeasts) appears at Tariff entry No.30029030 of the First Schedule of the Customs Tariff Act, 1975 (51 of 1975). Looking to the process of manufacture/production of biofertilizers, their uses, the specific subheadings covered under the above heading as well as the explanatory notes to HSN of the above heading, it can be concluded that the biofertilizers namely Rhyxomyx and Rhyxomyco manufactured and supplied by the appellant are classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; toxins, cultures of micro-organisms (excluding yeasts) and similar products- Entry 61 of ScheduleII of rate of GST on Goods, comprising of List of Goods at 6% Rate 3. The appellant had contended that their products were rightly classifiable under chapter 3101 of the Customs Tariff Act, 1975. The Advance Ruling Authority vide order bearing No. GUJ/GAAR/R/23/2020 dated 02.07.2020 ruled that their products are classifiable under Heading No.3002 of the Customs Tariff Act, 1975 based on the findings as mentioned below: (i) From the details submitted by the applicant and comparing the same to the definitions and benefits of biofertilisers described in para-9 of the order, it can be seen that the above products manufactured and supplied by the applicant are biofertilisers. (ii) In para 9 of the order, the definitions and benefits of biofertilisers were mentioned as under: (a) As per dictionary, biofertilisers are defined as a substance which contains living micro-organisms which, when applied to seeds, plant surfaces, or soil, colo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be construed in generic terms. In generic terms, vegetable fertilisers would be the fertilizers derived from vegetable matter like compost and crop residues. (iv) As can be seen from the 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(aggregate) so that the soil holds more nutrients and water, and therefore becomes more fertile. However, biofertiliser consists of living microorganisms which, when applied to seeds, plant surfaces or soil, colonize the thizosphere or the interior of the plant and promotes growth by increasing the supply or availability of primary nutrients to the host plant. Besides as per Vikaspedia, biofertilizers are produced by culturing of microorganisms and that such cultured micro organisms are packed in some carrier material for easy application in the field. Thus on comparing the definition as well as the uses of Biofertilizers vis-a-vis Animal fertiliser/organic fertilizer/vegetable fertilizer, it can be seen that B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) The impugned order has not considered the explanatory notes to HSN. The appellant wishes to draw attention of the Hon ble Appellate Authority that HSN notes clarifies that chapter 3101 inter alia covers compost consisting of rotted waste vegetable and other matter where decay has been accelerated or controlled by treatment with lime, etc. The humic acid which is an ingredient of the product is complex organic acid by decomposition of dead vegetable matter. In common parlance, it can be called as compost. Further mycorrhizza which is an active ingredient contains live animals. Therefore, the Appellant submits that the products in question are classifiable as other fertilisers of heading 3101(Sl.No.182 of Schedule-I to the GST rate schedule). (iv) Further in this connection, the appellant wishes to submit that in an Hon ble Rajasthan Advance Ruling authority vide its order bearing no. RAJ/AAR/2018-19/04 dated 16.06.2018 has dealt with similar product and has given a ruling that Bio fertilizer is a substance which contains living micro-organisms which, when applied to the seed, plant surfaces or soil colonizes the rhizophere or the interior of the plant and promotes gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in light of the merits of the case since the delay is not intentional. The appellant has placed reliance on Apex Court s decisions in the case of (i) Collector, Land Acquisition vs. Mst.Katiji [1987] 66 STC 228 (SC) and (ii)West Bengal Infrastructure Dev. Fin. Corpn.Ltd., reported in 2012 (279) ELT 3 (SC) wherein it was held that in case of high stake matters the appeals should not be disposed off on ground of delay and there could be cost imposed and delay condoned in the case of revenue appeals. 6. The appellant concluded their submission with a request that the Appellate Authority be pleased to hold that the products in question being bio fertilizers are classifiable under heading 3101. FINDINGS :- 7. We have considered the submissions made by the appellant in the appeal filed by them, their contentions during the course personal hearing as well as evidences available on record. We have also gone through the Ruling given by the GAAR. 8. The Advance Ruling was sought for by the appellant for appropriate classification and applicable rate of Goods and Services Tax for their products namely Rhizomyx and Rhizomyco. GAAR vide Advance Ruling No. GUJ/GAAR/R/23/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new tax regime and there may be bona-fide mistake on the part of a registered person. Therefore, the delay in filing of appeal in this case is condoned in exercise of the powers contained in proviso to the sub-section (2) of Section 100 of the Central Goods and Services Tax Act, 2017 (herein after referred to as the CGST Act, 2017 ) and the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as the GGST Act, 2017 ). 10. On going through the submission given by the appellant, they have contended that the products manufactured by them are rightly classifiable under Heading 3101. However, we find that the appellant has not submitted any supporting documents to support their claim. We therefore proceed to decide the issue of classification of the products of the appellant viz. Rhizomyx and Rhyzomyco based on the evidences available on records. Before deciding the classification of the above products, we need to find out whether the products of the appellant i.e. Rhyzomyx and Rhyzomyco are biofertilisers as stated by the appellant. For that we are required to find out the definition of biofertilisers: As per Wikipedia, biofertilisers are defined as a substance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant. The term mycorrhiza refers to the role of the fungus in the plant's rhizosphere, its root system. Mycorrhizae play important roles in plant nutrition, soil biology and soil chemistry. (b) Humic acid: A group of molecules that bind to, and help plant roots receive, water and nutrients. High humic acid levels can dramatically increase yields. Humic acid deficiency can prevent farmers and gardeners from growing crops with optimum nutrition. Further, brief of the details as per the brochures of Rhizomyco and Rhizomyx, is as under: (a) Rhizomyco: Rhizomyco is uniquely formulated with Novozymes proprietary blend of microbes and growth promoting substances containing eighteen species of endo and ectomycorrhizae in a soluble/injectable form to provide broad spectrum application for increased nutrient update and enhances root systems. It increases nutrient and water absorption, improves plant disease resistance, greatly extends the root system and improves stress tolerance. The said product is applied on Direct sown crops, transplanted crops and horticultural/tree crops as detailed below: (i) Application on Direct sown crops(oilseeds, cotton, melons, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il drenching, fertigation Apply approximately 15 days after sowing or first application. 250 grams per hectare. (iii) Application on Tree crops(fruit crops, plantation crops etc.) First application: soil drenching or fertigation. At the time of fertilizer application. 250 grams per hectare: 0 to 6 year old crop. 500 grams per hectare 6 year old crop. Second application: soil drenching or fertigation 40 to 45 days after first application. 250 grams per hectare: 0 to 6 year old crop. 500 grams per hectare 6 year old crop. From the above details and comparing the same to the definitions and benefits/uses of biofertilisers described in para 10 above and also taking into consideration the fact that no chemicals are contained in the aforementioned products and there is the presence of endomycorrhiza and ectomycorrhiza (which are microorganisms), it can be seen that the said products manufactured and supplied by the appellant are biofertilisers. 12. In order to determine the classification and tax liability on the supply of the products RhizoMyx and Rhizomyco by the appellant and to decide as to whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Guano, which is an accumulation of the excreta and remains of sea birds, found in large quantities on certain islands and coasts. It is both nitrogenous and phosphatic, and is usually a yellowish powder with a strong ammoniacal odour. (2) Excreta, dung, soiled fleece waste and manure, unsuitable for use other than as fertilizers. (3) Rotted vegetable producs, unsuitable for use other than as fertilizers. (4) Disintegrated guano. (5) Products resulting from the treatment of leather with sulphuric acid. (6) Compost consisting of rotted waste vegetable and other matter where decay has been accelerated or controlled by treatment with lime, etc. (7) Wool scouring residues. (8) Mixtures of dried blood and bone meal. (9) Stabilised sewage sludge from urban effluent treatment plants. Stabilised sewage sludge is obtained by screening the sewage effluent to remove large objects and settling out grit and heavy non-biological constituents; the remaining sludge is then allowed to air dry or is filtered. The stabilized sludge so obtained contains a high proportion of organic matter and also contains some fertilizing elements (e.g., phosphorus and nitroge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the soil. (vii) 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. Since the definition of vegetable fertilisers is not available anywhere, hence it would have to be construed in generic terms. In generic terms, vegetable fertilisers would be the fertilizers derived from vegetable matter like compost and crop residues. As per the submission of the appellant, their products are biofertilisers. The definition of biofertilisers is as under: Biofertiliser : A biofertiliser is a substance which contains living microorganisms which, when applied to seeds, plant surfaces, or soil, colonize the rhizosphere or the interior of the plant and promotes growth by increasing the supply or availability of primary nutrients to the host plant. 14.1 Vikaspedia defines biofertilisers 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- 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 tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as the said notification), we find that the same appears at entry No.61 of Schedule-II(on which the effective of GST is 12%(6% SGST + 6% CGST) which reads as under: S.No. Chapter/Heading/Sub-heading/ 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 microorganisms (excluding yeasts) and similar products On going through the column (3) of above entry, the entire portion of the description of goods except cultures of micro-organisms (excluding yeasts) pertains to the medical field. On going through the said Subheading 3002, it is seen that cultures of micro-organisms (excluding yeasts) appears at Tariff entry No.30029030 of the First Schedule of the Customs Tariff Act, 1975 (51 of 1975). Further as per Vikaspedia, biofertilizers are produced by culturing of microorganisms and that such cultured micro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the CESTAT to support their contention. We find that the Appellate Tribunal in this case had held that Dhanzyme is a biofertiliser being a plant growth promoter only, thus classifiable under sub-heading 3101.00 of Central Excise Tariff Act, 1985. On going through the aforementioned order of CESTAT, we find that the product Dhanzyme of M/s. Northern Minerals ltd. is not a product manufactured by them, but is obtained in bulk from other companies, repacked and sold in smaller packages under their Brand name Dhanzyme Also, the issue in the aforementioned matter was whether the product Dhanzyme as a biofertiliser warrants classification under Heading 3101 or under Heading 3808 as Plant growth regulator whereas the issue in the present case is whether the products of the appellant merit classification under Heading 3101 or 3002 of the Customs Tariff Act, 1975(51 of 1975). Also the alternate classification available for biofertilisers under Heading 3002 has not been discussed in the said order. Therefore, the said judgement cannot be made applicable to the present case, in toto. However, in view of the fact that the appellant, based on the aforesaid judgement, states tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentions Cultures of micro-organisms (excluding yeast) . (3) As per explanatory notes to HSN for heading 3002, it covers cultures of micro-organisms for technical purposes (e.g., for aiding plant growth). (4) As per Vikaspedia, Biofertilisers help in promoting/aiding plant growth, directly or indirectly as it fixes atmospheric nitrogen in the soil and root nodules of legume crops and make it available to the plant, scavenges phosphate from soil layers, produces hormones and anti metabolites which promote root growth, decompose organic matter and help in mineralization in soil and when applied to seed or soil, biofertilizers increases the availability of nutrients and improved the yield by 10 to 25% without adversely affecting the soil and environment. Similarly, the products of the appellant provide increased nutrient update and enhances root systems, increases nutrient and water absorption, improves plant disease resistance, greatly extends the root system and improves stress tolerance. 18. We also find that the appellant has relied on the order bearing no. RAJ/AAR/2018-19/04 dated 16.06.2018 of the Rajasthan Advance Ruling Authority. In this regard, we have to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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