TaxTMI 
TaxTMI 
2021 (10) TMI 59
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....tilizers, Nitrogeneous mixture fertilizers and Mixture fertilizers. GAAR vide order No. GUJ/GAAR/R/71/2020 dated 17.09.2020 classified the aforementioned products as under: (1) 'Organic manure' was classified under Chapter sub-heading No.31059090 on which GST liability was 5% (2.5%SGST + 2.5%CGST). (2) 'Bio-fertilizers' were classified under Chapter sub-heading No.30029030 on which GST liability was 12% (6%SGST + 6%CGST). (3) 'Nitrogeneous mixture fertilizers' were classified under Chapter subheading No.31029090 on which GST liability was 5% (2.5%SGST + 2.5%CGST). (4) 'Mixture of fertilizers' was classified under Chapter sub-heading No.31059090 on which GST liability was 5% (2.5%SGST + 2.5%CGST). 2. Aggrieved with the aforesaid ruling, the appellant has filed the present appeal on 28.10.2020 challenging the classification of Bio-fertilizers given as per the Advance Ruling of GAAR. However, the appellant has not challenged the Advance Ruling given in respect of the products Organic manure, Nitrogeneous mixture fertilizers and Mixture of fertilizers. The appellant has submitted that as per the Fertilizer Control Order 1985, Bio-fertilizer means ....
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....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. 4. 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 after granulation from granulator drum. After drying, the conveyor belt sends the granules to cooling drum. 5. 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. 6. 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 reprocessed. 7. 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 feeded and spray of required Bio-fertilizer as per requirement is done. ....
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....ng with various other components and are not sold as micro organisms for pharmaceutical use and therefore, their classification under chapter heading 30029030 is not valid. (iv) The Bio-fertilizers manufactured by the appellant are a mixture of various components used by buyers to increase the productivity of soil or crop. It has no purpose as a pharmaceutical product and thus it's classification under HSN 3002 is not valid and should be covered under chapter heading 3101. (v) Bio-fertilizers are also permitted to be used for Organic farming. The key elements of components are as follows: Component Key Element Organic manure Carbon, Nitrogen, Phosphorous and Potash. Coal powder Organic carbon. Bone meal Phosphorus, organic carbon and calcium. Bio-fulvic Potassium Nitrogen and Potassium. Amino acids Carbon, Hydrogen, Oxygen and Nitrogen. Potassium humate Potassium. Rock phosphate Phosphorous. (vi) The Regional Director, Regional Centre of Organic Farming published a booklet on "Organic Manures" in January, 2005 wherein it was mentioned that carbon present in soil is in form of organic manure. The components u....
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....ineral Powder 30% 8. Gypsum(Carrier Material) 15% 9. Dolomite Mineral(Carrier Material) 5% Total input 115% Normal wastage 15% Output i.e. Bio-fertilizers 100% The appellant has stated that from the total input of 115%, normally 15% is waste, and therefore usually for 1 quantity of output, 115% raw materials are used. The appellant has also submitted that the main ingredient in the output is organic manure, the main source of which is animal waste. They have also submitted that they use organic manure as main ingredient because their intention is to sell the Bio-fertilizers to the agriculturists for agricultural purpose only. (ii) The appellant has relied on the Advance Rulings of (a) Rajasthan Authority for Advance Ruling in Rhizo Organic-2018 (14) GSTL. 600 (AAR-GST) and (b) Uttarakhand Authority for Advance Ruling in M/s. Elefo Biotech Pvt. Ltd. -15/2018-19 to support their contention stating their final products are sold for agricultural purpose only and therefore the above rulings support their contention and therefore bio-fertilizers will be covered under Chapter Heading 3101. (iii....
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.... agriculture only. (vii) In order to substantiate that the products manufactured by them are for agricultural use only, the appellant have submitted a Tax Invoice of sale of Bio-fertilizers to one of the Dealers wherein Point No.5 in Declaration given on Tax Invoice clearly states 'The above products are for agriculture use only'. (viii) The appellant has stated that 'For Agricultural Use only' is specifically mentioned on the packaging or containers of the Biofertilizers. Copy of Packaging of Bio-fertilizers is also submitted. 7. The appellant has concluded his submission by stating that the Biofertilizers manufactured by them are intended to be sold to farmers for Agricultural use only and thus should be classified under chapter heading 3101 i.e. All goods i.e. animal or vegetable fertilizers or organic fertilizers put up in unit containers and bearing a brand name. FINDINGS :- 8. We have considered the submissions made by the appellant in the appeal filed by them, their contentions during the course of personal hearing as well as evidences available on record. We have also gone through the Ruling given by the GAAR. 9. The Advance Ruling was sought f....
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....e rhizosphere or the interior of the plant and promotes growth by increasing the supply or availability of primary nutrients to the host plant. • 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 selecting efficient organisms, culturing them and adding them to soil directly or through seeds. The cultured micro organisms packed in some carrier material for easy application in the field are called bio-fertilisers. Thus the critical input in Biofertilisers is the microorganisms. 12. The appellant has submitted that as per the Fertilizer Control Order 1985, Bio-Fertilizer means the product containing carrier based (solid or liquid) living microorganisms which are agriculturally useful in terms of nitrogen fixation, phosphorus solubilisation or nutrient mobilization, to increase the productivity of soil or crop. 13. As per Vikaspedia, benefits/uses 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....
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.... Sr.No. Raw material Percentage 1. Organic manure 50% 2. Lignite/Coal powder 5% 3. Bio-Fulvic 2% 4. Potassium Humate 1% 5. Rock Phosphate Mineral 5% 6. Bio Culture 2% 7. Ball Clay Mineral Powder 30% 8. Gypsum(Carrier Material) 15% 9. Dolomite Mineral(Carrier Material) 5% Total input 115% Normal wastage 15% Output i.e. Bio-fertilizers 100% 15. The appellant has also stated that from the total input of 115%, normally 15% is waste, and therefore usually for 1 quantity of output, 115% raw materials are used. The appellant has also submitted that the main ingredient in the output is organic manure, the main source of which is animal waste. They have also submitted that they use organic manure as main ingredient because their intention is to sell the Bio-fertilizers to the agriculturists for agricultural purpose only. It is also observed that the aforementioned composition of inputs (percentage wise) for 'Bio-fertilizers' (which they have submitted now) was never brought to the notice of the Advance Ruling Authorities by the appellant but has been su....
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....classified as complete or finished by virtue of this rule), presented unassembled or disassembled. b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. "3. When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them giv....
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...., will obviously be the same. We also find that the Gujarat Authority for Advance Ruling (GAAR) vide the impugned order dated 17.09.2020 had classified the product 'Organic manure' of the appellant under Chapter sub-heading No.31059090 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) which was liable to GST at 5% in terms of Sl.No.182D of Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 as amended on the following grounds: (i) Chapter heading 3101 00 which reads as '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' clearly indicates that it covers fertilizers produced by mixing or chemical treatment of animal or vegetable products. The ingredients used for manufacture of 'organic fertilizers' as per the applicant are poultry manure, organic ash, compost, cow dung, bone meal, vegetable waste, sulphur powder(mineral), rock phosphate(mineral) and Bentonite(Mineral), Gypsum(for neutralisation), bioculture amino acid, bio-fulvic and potassium humate. Of the said ingredients, poultry manure, organic ash, compost, c....
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....o acids) and 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, hence presence of nitrogen is visible. Further, it contained potassium humate, hence 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, hence product also contains phosphate elements. In addition, the product also contains minerals viz. sulphur powder and bentonite. Thus, the product is a mixture of animal or vegetable products, minerals, nitrogen, phosphate and potassium and hence merits classification under Chapter subheading 31059090 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 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 fert....