Classification of Micronutrients, Multi-micro nutrients, Plant Growth Regulators & Fertilizers

Circular No. 1022/10/2016- Central Excise

F. No. 106/03/2013-CX.3

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

New Delhi, dated the 6th April, 2016

To,

Principal Chief Commissioner of Central Excise/ Service Tax (All),

Chief Commissioner of Central Excise/ Service Tax (All),

Principal Commissioner of Central Excise/ Service Tax (All),

Webmaster, CBEC

Madam/Sir

Sub: Classification of Micronutrients, Multi-micro nutrients, Plant Growth Regulators and Fertilizers-  reg.

The issue of classification of micronutrients, multi-micro nutrients, plant growth regulators and fertilizers has remained a disputed area in Central Excise. To bring clarity to the issue of classification thereof, it was decided to take opinion of Indian Agricultural Research Institute (IARI) on various issues relating to micronutrients such as – what constitutes micronutrients, its usage, distinction from plant growth regulator, if any, etc. In light of the opinion received from IARI, Central Excise Tariff and explanatory notes of HSN, nature, usage and classification of micronutrients, multi-micronutrients, plant growth regulators and fertilizers is explained in the following paragraphs.

2.1 Micronutrients are essential nutrients that are required in small quantities 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. Reply received from IARI on the  subject, enclosed with the circular, may please be referred for further details. Inputs received from the trade indicates that 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 Central Excise Tariff. For classification under chapter 31 , at least one of the elements, namely- nitrogen, phosphorus or potassium should be an essential constituent of the fertilizer as per chapter note 6 of chapter 31.

2.2  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 sulphates of micronutrients are specifically covered under CETH 2833.

2.3  Vide Notification no. 12/2016 – C.E dated 1.3.2016, Notification no.12/2012 – C.E dated 17.3.2012 has been amended and a new serial no 109A has been inserted to exempt duty of excise in excess of 6%, payable on micronutrients classifiable under chapter 28, 29 or 38 and covered under serial number 1(f) of Schedule 1, Part (A) of the Fertilizer Control Order,1985 and manufactured by the manufacturers registered under the Fertilizer Control Order, 1985.

3.1  Plant Growth Regulators are defined as organic compounds other than nutrients that affect the physiological processes of growth and development in plants when applied  in  low concentration. Plant growth regulators are active at low concentrations in promoting, inhibiting or modifying growth and development. They are either natural or synthetic compounds that are applied directly to a target plant to alter its life processes and its structure to improve quality, increase yields, or facilitate harvesting etc. These are in the nature of plant hormones and classical of them are auxins, cytokinins, gibberellins (all three promoters) and abscisic acid, ethylene (both inhibitors). PGRs in the list are not exhaustive and more growth substances are being discovered in this category. PGRs are naturally produced by plants and they act by controlling or modifying, plant growth processes such as formation of leaves and flowers, elongation of stems, development and ripening of fruits etc. Synthetic organic chemicals are also used as PGRs and are industrially produced and marketed. A list of some of the PGRs industrially produced in India is enclosed with the reply of IARI.

3.2  It would thus be noted that PGRs are different from nutrients, be it macronutrient or micronutrient. The difference between PGR and micronutrient has been clearly brought out in the reply from ICAR. PGR as a substance is specifically covered under CETH 3808. More specifically, Gibberellic acid and Plant Growth regulators are respectively covered under tariff item 3808 9330 and 3808 9340.

4. Fertilizers are classified under chapter 31 of the Central Excise Tariff and for this purpose they may interalia be minerals or chemical fertilizers  nitrogenous (CETH 3102), phosphatic (CETH 3103), potassic (CETH 3104) or fertilizers consisting of two or three of the fertilizing elements namely nitrogen, phosphorous and potassium; other fertilizers (CETH 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 CETH3105 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 product. The chemical elements – nitrogen, phosphorus and potassium are also referred as macronutrients or primary fertilizer elements and are required in higher quantity by the plants.

4.2 Any product where the essential elements are not nitrogen or phosphorus or potassium or their mixture would not merit classification under CETH 3105. Further, the specific exclusion of separate chemically defined compounds as laid down in chapter note 1 (b) and in the HSN Explanatory Notes to the heading 3105.90, reinforce the above conclusion. It may also be noted that notifications issued under Fertilizer Control Order are not relevant for deciding classification under the Central Excise Tariff.

5. Mixtures  of  micronutrients/multi-micronutrients with fertilisers are also manufactured and sold. They shall be classified according to their essential characters and general rules for interpretation of the schedule to the tariff. Where the essential constituent giving character to the mixture is one or more of the three elements namely Nitrogen, Phosphorous or Potassium, the mixture shall be classified under any of the heading of Chapter 31, depending upon its composition. On the other hand, where the essential character of the product is that of mixture of micronutrients/multi-micronutrients having predominately trace elements, it shall be classified under CETH 3824 as chemical products not elsewhere specified or included.

6. Past circulars of the Board on the subject namely 79/79/94-CX dt 21-11-94 and  392/25/98 – CX dt 19-5-1998 stand rescinded. Classification of Micronutrients, Multi-micronutrients, Plant Growth Regulators and Fertilizers shall be governed by the clarification contained in this circular to the extent the product under consideration is covered by the circular.

7. Difficulty experienced, if any, in implementing the circular should be brought to the notice of the Board. Hindi version would follow.

(Shankar Prasad Sarma)

Under Secretary to the Government of India

Encl: Opinion of IARI (5 pages)

ICAR – Indian Agricultural Research Institute New Delhi

Classification of Micro-nutrients

Table 1: LIST OF MARKETED PLANT GROWTH REGULANTS WITH ACTIVE INGREDIENTS

*SL – Liquid Suspension; WP – Wettable Powder; EC – Emulsifiable Concentrate; DP – Powder Dust