Case Law Details
In re Zuari Farmhub Limited (GST AAAR Andhra Pradesh)
GST Appellate Authority for Advance Ruling (AAAR) in Andhra Pradesh recently confirmed the classification of Zuari Farmhub Limited’s products, Mangala Borosan and Mangala G1, as micronutrient fertilizers rather than traditional fertilizers under Chapter 3105 of the Customs Tariff Act. The appellant argued that these products should be classified as fertilizers under Chapter 3105, citing their use in agriculture and their composition. However, the AAAR upheld the earlier Authority for Advance Ruling (AAR) decision, which classified these products under 2833 29 90, reflecting their true nature as micronutrient fertilizers.
The central issue in this case was whether Mangala Borosan and Mangala G1, both containing various micronutrients such as Zinc, Iron, and Manganese, should be classified under Chapter 3105, which pertains to fertilizers containing essential elements like Nitrogen, Phosphorus, and Potassium. The appellant provided technical documentation and a Certificate of Confirmation from Mangalore Chemicals & Fertilizers Limited (MCFL) to support their claim that the products are fertilizers. Despite these submissions, the AAAR found that the products did not meet the necessary criteria under Chapter 3105 because they lacked the essential fertilizing elements specified in the Chapter Notes.
The AAAR emphasized that the classification of a product for GST purposes is based on its composition at the time of supply, not its effects when used. According to the Chapter Notes of the Customs Tariff Act, for a product to be classified as a fertilizer under Chapter 3105, it must contain one or more of the primary fertilizing elements: Nitrogen, Phosphorus, or Potassium. The AAAR noted that neither Mangala Borosan nor Mangala G1 contained these essential elements. Instead, they are classified under 2833 29 90, which encompasses micronutrient fertilizers, based on their composition of micronutrients rather than primary fertilizing elements.
Further, the AAAR considered the definitions provided in the Fertilizer Control Order (FCO) 1985, which includes micronutrients but does not alter the classification requirements outlined in the Customs Tariff and GST Rate Notifications. The FCO defines fertilizers based on their ability to provide essential nutrients to plants, but this definition does not supersede the classification criteria set forth in the tariff schedules for GST purposes. The AAAR’s decision aligns with the GST Rate Notifications, which clearly delineate the tax rates for fertilizers and micronutrient fertilizers based on their content and intended use.
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