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TMI Blog2024 (8) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Tariff determines the Tax rate - Further, while Fertilizers are classified under Chapter 31 of the Tariff, however, classification of a product is a function of not only the description of the Entries therein, but the inclusion / exclusions mentioned in the Section Notes and Chapter Notes further read with the General Rules of Interpretation. Thus, the appellant's contention that the Nitrogen is emanated during the use of the products in question and thus eligible for classification under Chapter 31 of the Customs Tariff is not tenable. Products are to be assessed based on the form and contents at the time of presentation / supply and not on the results of their usage. In the Explanation under the said Section 2(h) it is clarified that for the purpose of Fertilizer, Essential plant nutrients include Primary Nutrients (Nitrogen, Phosphorous and Potassium) ... It may be noted that in the definition under Section 2(h) cited, Fertiliser means any essential substance used or intended to be used to provide essential plant nutrients . As per the Explanation, such essential plant nutrients should contain Nitrogen, Phosphorous and Potassium. Relying on this definition does not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Borax 04.00% Borax 11.00% Dolomite 20.00% Dolomite 20.00% Soap stone powder 07.50% Soap stone powder 22.50% Magnesium sulphate (MgSO4) 10.00% Copper Sulphate (CUSO4) 02.50% Total 100.00% 100.00 % The Authority for Advance Ruling Andhra Pradesh in its orders in AAR No. 11/AP/GST/2023 dated 15.12.2023 held: Question 1 : Whether the products referred supra i.e., Mangala Borosan and Mangala G1 are classifiable under Chapter Heading 3105 as Fertilisers? Answer 1: No Question 2 : If the answer to the question no. 1 is in negative, what would be the appropriate classification of the said micronutrient Fertilisers? Answer 2 : 2833 29 90 (Under Schedule III-18 % (CGST-9% and SGST-9 % or IGST-18%) Aggrieved by the impugned order, the appellant has filed the present appeal on the following grounds. 2. Grounds of Appeal: Appellant's submissions are broadly summarised based on the following: A. Products in question (Mangala Borosan and Mangala Gl) are nothing but Fertilisers. Chapter31 of the Customs Tariff Act,1975 and in particular HSN codes 3101 to 3105 specifies technical descriptions of Fertilisers. However, the term Fertiliser is not defined either under Customs Tariff Act, 1975, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fertilisers (including other Fertilisers) is 3105. The relevant extract from Chapter 31 is reproduced hereunder: HSN Disclosures 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 90 - Other 3105 90 90 --- Other Further, in the scheme of classification i.e., First Schedule to Customs Tariff Act, 1975, where classification of Fertilisers is provided for in a separate Chapter i.e., Chapter 31 of the Tariff Act, Appellant for reasons detailed below is of the view that, products manufactured and supplied as Micronutrient Fertilisers is classifiable under Chapter 31 and in specific 8-digit heading being 3105 9090. The proposed products are covered under the Andhra PradeshState government notification which provides for Fertilisers. Further, multiple Chemicals (Micronutrients) to be used in manufacture of proposed products are covered in SI. No. 1 (g) of Fertiliser Control Order (1985), which specifies necessary technical information for each chemical and mixtures thereto that can be used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fora. The relevant extract from Chapter 38 is reproduced hereunder: Given the extract, it is identifiable that the said Chapter is providing a miscellaneous/generic description of all mixtures which are not classifiable under any other chapter. As stated supra from para 3.1 to 3.10, the products in question are clearly classifiable under Chapter 31, specifically under 3105 90 90 and hence resort to Chapter 38 and in specific heading 3824 would be incorrect and inappropriate. HSN Disclosures 3824 Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included 3824 9 - Other 3824 99 00 -- Other D. Conclusion by the LAAR, the product is mixture of inorganic chemicals is erroneous as the product is nothing, but a fertiliser made up of micronutrients specified under serial number 1(g) of Schedule 1, Part (A) of the Fertilizer Control Order, 1985. The appellant would like to bring to the attention of Learned Appellate Authority for Advance Ruling (hereinafter referred as LAAAR ), that LAAR has erred in concluding our product as a mixtur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 01/2017-Central Tax (Rate) dated 28.06.2017 read with relevant State Rate Notification and taxable at 5% GST. Whereas, if such chemicals or minerals cannot be used as Fertilisers, then such items will be classified under Schedule III to the said notifications and taxable at the rate of 18% GST. In this backdrop, where the Appellant's products will be sold and used, as fertilizers in the field of agriculture, the said products will be classifiable under Schedule I to the above referred Notifications and taxable at the rate of 5% GST. Assuming but not admitting that the product is not classifiable under Heading 3105 90 90, and classifiable under chapter 38,rate of GST would be applicable as tabulated below: From the above, it is clear that the product in the instant caseis nothing but a blend/mixture of micronutrients which are listed under SI.No. 1(g) of Schedule I, Part (A) of FCO 1985, which is to be used as fertilizers, it would merit classification under the Entry 56 of schedule II , if not under Heading 3105 90 90 of the Customs Tariff Act, 1985as referred in SI. No. 1 of table appended to para 4.1 supra. For the reasons stated supra it is clear that the clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified, or included Schedule III 18% (CGST 9% and SGST 9% or IGST -18%) SI.No Chapter / Heading / Subheading / Tariff Item Description of Entry Schedule and Rate Of GST 39 28 All inorganic chemicals [other than those specified in the Schedule for exempted goods or other Rate Schedules for goods including Fertilizer grade Phosphoric acid Schedule III 18% (CGST -9% and SGST - 9% or IGST -18%) 3. Personal Hearing: The proceedings of hearing were conducted through video conference on 21.03.2024. The authorized representative Badrinath N R, Partner, attended and submitted Certificate of Confirmation by Mangalore Chemicals and Fertilizers Limited and reiterated the submissions already made to this Authority. 4. Discussion and Findings: Findings Observations: 1. We have gone through the Appeal filed before this Authority, the various, submissions and additional submissions made by the Appellant, and also perused the extracts and other documents along with Certificate of Confirmation given MCFL on record in the matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fertilizer (Inorganic, Organic or Mixed) (Control) Order, 1985 and certified that out of the above composition, the following are micro-nutrients. A. Manganese Sulphate (Entry No. 2) B. Copper Sulphate (Entry No. 4) C. Iron/Ferrous (II) Sulphate (Entry No. 5) D. Zinc Sulphate Mono-hydrate (Entry No. 9) E. Magnesium Sulphate (Entry No. 10) F. Boran / Borax (Entry No. 16) Further certify that the products, Mangala Borosan and Mangala G1 are mixtures of micronutrients and are fertilizers meant for use in agriculture only. The Appellant has stated that the constituents of the products are as follows: Product 1: Mangala Borosan Composition Product 2: Mangala Gl Composition Items: items: Zinc Sulphate Monohydrate (ZnSO4.H2O) 32.50% Zinc Sulphate Monohydrate (ZnSO4.H2O) 17.00% Iron (II) sulphate (FeSO4) 28.00% Iron (11) sulphate (FeSO4) 13.00% Manganese (11) sulphate (MnSO4) 08.00% Manganese (H) sulphate (MnSO4) 04.00% Borax 04.00% Borax 11.00% Dolomite 20.00% Dolomite 20.00% Soap stone powder 07.50% Soap stone powder 22.50% Magnesium sulphate (MgSO4) 10.00% Copper Sulphate (CUSO4) 02.50% Total 100.00% 100.00% We have further seen the submissions made by the Appellant. It is pertinent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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; other than those which are clearly not to be used as fertilizers ; 2.5% 2.5% III 45 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, which are clearly not to be used as fertilizers 9% 9% The description of each of the Headings is as under: Chapter/Heading/ Sub-heading/Tariff item Description of Goods 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; other than those which are clearly not to be used as fertilizers ; 3105 Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order (FCO), 1985 for classification of the products in question under Chater 31 or alternatively Chapter 38. As seen from the relevant Notification, there is no reliance on the FCO Order to determine the classification of the product. The Appellant has missed a key element of the definition of Fertilizer under the FCO. The relevant definition as provided by the Appellant is extracted hereunder for ready reference: 3.2. According to Section 2(h) of FCO, 1985 Fertiliser means any essential substance, either in straight or mixed form and derived from either inorganic, organic or mixed sources, that a used or intended to be used to provide essential plant nutrients or beneficial elements or both for the soil or for the crop or makes essential plant nutrients available to the plants either directly or by biological process or by both in the soil or plant as notified from time to time by Central Government and specified in the schedules appended to this order or as may be notified by the State Governments, and includes a biostimulant and nanofertiliser. Explanation :- For the purpose of Fertiliser, - (i) the essential plant nutrients include Primary Nutrients (Nitrogen, Phosphorous and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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