TaxTMI 
TaxTMI 
2021 (1) TMI 543
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...., Rock Phosphate (Mineral) & Bentonite (Mineral). 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 t....
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.....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 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 specifi....
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....ers. 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 • 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 ....
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....ine 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 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 se....
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....hate, 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 goods described in (a) or (b) above mixed with chalk, gypsum or othe....
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.... 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 *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 Goo....
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....017- C.T. (Rate), dated 28-6-2017], 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 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....
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....¢ 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 Phosphat • Ammonium Sulphate • Bentonite • Dolomite • Amino 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....
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.... (b) Organic Fertilizers: The word organic applied to fertilizers usually means that the nutrients contained in the products are derived solely from the remains of a once-living organism. Thus, organic fertilizers are derived from animal matter (animal wastes from meat processing, animal excreta (manure) or vegetable matter (e.g. compost and crop residues) which are different from manufactured fertilizers synthesized from various chemicals. In general, organic fertilizers act much like the slow-release fertilizers which release nutrients over an extended period of time whereas synthetic fertilizers release requires chemicals quickly on their application. The Common characteristic of both organic and manufactured fertilizers is that they contain nutrients that promote plant growth. (c) Bio Fertilizers: 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 ph....
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....f endosperm reserves during early embryo growth and seed germination; Abscisic acid (ABA) in plants is a terpenoid involved 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. (e) 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 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 v....
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....s under: Gypsum is a soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4*2H2O. It is widely mined and is used as a fertilizer Another ingredient viz. Potassium Humate has been defined in Wikipedia as under: Potassium humate is the potassium salt of humic acid. It is manufactured commercially by alkaline extraction of brown coal (lignite) Leonardite to be used mainly as a soil conditioner. The extraction is performed in water with the addition of potassium hydroxide (KOH), sequestering agents and hydrotropic surfactants. Heat is used to increase the solubility of humic acids and hence more potassium humate can be extracted. The resulting liquid is dried to produce the amorphous crystalline like product which can then be added as a granule to fertiliser. The potassium humate granules by way of chemical extraction lose their hydrophobic properties and are now soluble. The above 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 ha....
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....st schedule to the Custom Tariff Act. 17.1 The composition of the product contains Amino Acids (Bio-culture amino acids). The key elements of an amino acid are carbon (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. Therefore, the said product merits classification under Chapter 3105 90 90 which 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....
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.... "BIO-FERTILIZERS": 19. Now, we come to the classification of "Bio fertilizers". The definition of bio fertilisers as given in the dictionaries are as under: 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 as under: 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 nitrog....
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....aces, 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. Besides, as per Vikaspedia, bio fertilizers are produced by culturing of microorganisms and that such cultured microorganisms are packed in some carrier material for easy application in the field. Thus on comparing the definition as well as the uses of Bio fertilizers vis-a-vis Animal fertilizer/organic fertilizer/vegetable fertilizer, it can be seen that Bio fertilizers are completely distinct in nature and use to these fertilisers. In view of these facts, we come to the conclusion that 'bio fertilisers' are not covered under the Sub-heading 3101 of the First Schedule to the Customs Tariff Act, 1975(15 of 1975). 20. Now, since bio-fertilizers are not covered under Sub-heading 3101, we need to find out whether the same is covered under sub-heading 3002 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Sub-heading 3002 reads as under: "3002 HUMAN BLOOD; ANIMAL BLOOD PREPARED FOR THERAPEUTIC, PROPHYLACTIC OR DIAGNOSTIC USES; ANTISERA, OTHER BLOOD FRACTIONS AND IMMUNOLOGICAL PRODUCTS, WHET....
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....ogical products, whether or not obtained by means of biotechnological processes; toxins, cultures of micro-organisms (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 Sub-heading 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, bio-fertilizers are produced by culturing of microorganisms and that such cultured microorganisms packed in some carrier material for easy application in the field are called bio fertilisers. Thus, it can be seen that bio-fertilizers are produced by culturing of micro-organisms which is covered by the Entry 'cultures of micro-organisms(excluding yeast)' which falls under Sub-heading No.30029030. 22. In view of the above, looking to the process of manufacture/ production of bio-fertilizers, it can be concluded that the product, "Bio-fertilizers" manufactured and supplied by the applicant are classifiable und....
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....ding 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 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 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 a....
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.... 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 chemical fertilisers containing two fertilizing elements namely nitrogen and potassium 3105 90 90 --- Other" Further, Chapter note 6 of Chapter 31 of the Customs Tariff Act, 1975, reads as under: "6. For the purposes of heading 3105, the term "other fertili....
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....ally 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 mineral fertilisers. The heading excludes: (a) Separate chemically defined compounds not specified in Notes 2 to 5 to this Chapter but which might be used as fertilisers, e.g. ammonium chloride which falls in heading 28.27. (b) Spent oxide (heading 38.25). The heading also covers the goods of this Chapter if put in tablets or similar forms or in packages of a gross weight not exceeding 10 kg." 24.2 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 effect....