Circular No. 392/25/1998-CX, dated the 19/05/1998

F.No.106/1/98-CX.3
Subject: Central Excise -Classification of Micronutrients -Clarification Regarding

Attention is invited to the instructions contained in Board"s Circular No. 79/79/94-CX., dated 21-11-1994 [See 1994 (74) E.L.T. T46] wherein Board had clarified that Micronutrients listed under the Fertiliser (Control) Order, 1985 and their mixtures (with or without N.P.K.), as notified by the Central Government or a State Government would be classifiable under CET Chapter 31.05.

2. A doubt has been raised regarding classification of certain Micro- nutrients such as compounds of Zinc, Boron, Manganese, Molybdenum, Iron etc., which are required in minor quantities to regulate plant growth -whether classifiable as fertilisers (31.05), plant growth regulators (38.08) or as separate chemically defined compound (Ch. 28).

3. The matter has been re-examined in the light of Supreme Court judgment in the case of Ranadey Micronutrients v. Collector of Central Excise -Civil Appeal No.5404 of 1993, decided on 10-9-1996- 1996 (87) E.L.T. 19 (S.C.). Micronutrients are basically salts of elements such as Zinc, Boron, Manganese, Molybdenum, Iron, etc., known as trace elements. These are essential for plant growth in small amounts only and their absence leads to stunted growth. These elements are supplied in minor quantities to regulate the formation of hormones etc., which in turn alter life processes of the plant so as to accelerate growth, enhance yield and improve quality, thus indirectly contributing to regulate plant growth.

4. According to HSN Explanatory Notes, plant growth regulators are applied to alter the life process of the plant so as to accelerate or retard growth, enhance yield, improve quality of facilitate harvesting, etc. Plant hormones are one type of plant growth regulators. Synthetic organic chemicals are also used as plant growth regulators.

5. Fertilizers are materials added to soil and, sometimes to foliage to supply nutrients to sustain plants and promote their abundant and fruitful growth. The elements that constitute these plant foods are divided into three classes -(1) Primary-Nitrogen (N), Phosphorous (P) and Potassium (K), (2) Secondary -Calcium (Ca), Magnesium (Mg) and Sulphur (5) and (3) Minor or so called micronutrients -Iron (Fe), Manganese (Mn), Copper (Cu), Zinc (Zn), Boron (B) and Molybdenum (Mo). However, for the purpose of classification of micronutrients as "Other Fertilizers" in Heading 31.05 CET, the scope of the term "Other Fertilizers" has to be determined in the light of Note 6 of Chapter 31. Further, the specific exclusion of separate chemically defined compounds as laid down in the HSN Explanatory Notes to Heading 3105.90, must also be borne in mind. If, the micronutrient is a separate chemically defined com- pound, it will be classifiable under Chapter 28/29. If not so, and if in accordance with Note 8 to Chapter 31, it contains N, P or K, it will be classifiable under Chapter Heading 31.

6. Further it is also stated that notification under F.C.O. is irrelevant for deciding classification under the Central Excise Tariff and regardless of such notification, the appropriate consideration should be :-

(i) whether or not the micronutrient in question is a separate chemically defined compound. If it is, then classification under 31.05 is ruled out; and

(ii) if it is not, whether it contains N, P or K as laid down in the Explanatory Notes.

7. Therefore, it is clarified that classification of micronutrients may be done in accordance with the above guidelines.

8. The above clarification may be brought to the notice of the lower field formations and the trade interest may also be suitably advised.

9. Board’s earlier Circular No. 79/79/94-CX, dated 21-11-1994 stands modified accordingly.

10. All pending assessments may be finalised on the above basis.

11. Hindi version is enclosed. Receipt, of this letter may please be acknowledged.

Presented by eximkey.com