Godrej Zymegold Contains Can Be Characterised As Fertilizer, Classified Under CTH 3101: CESTAT

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Godrej Zymegold, which contains nitrogen and chlorine, suffices to characterize the product as fertilizer, classified under CTH 3101.

The bench of Ajay Sharma (Judicial Member) and Anil G. Shakkarwar (Technical Member) has observed that the department has taken recourse to the definition of ‘fertilizer’ as provided in Fertilizer Control Order, 1985, for changing the classification, which could not have been done as the definition provided in other statutes, totally unrelated to the statute in issue, cannot be made the basis for changing the classification.

The issue raised was whether the products Zymegold Plus and Dripzyme are classifiable under CTH 3808, "Plant Growth Regulator," or under CTH 3101, "Fertilizer.

The appellants/assessees are in the business of manufacturing and clearing "Zymegold Plus granules’ and also ‘Zymegold Plus liquid’ as organic fertilizer by classifying the same under CSH 31010099 without payment of any Cenvat duty and also of dripzyme w.e.f. August 2011 as organic fertilizer under the same heading.

Organic fertilizer attracts a nil rate of duty. CSH 31010099 covers only animal and vegetable fertilizers, whether mixed or chemically treated.

The department was not satisfied with the classification made by the appellants and issued different show cause notices to the appellants from time to time for the period July 2011 to December 2013, which culminated in seven adjudication orders decided against the appellant. ‘Zymegold Plus granules’, ‘Zymegold Plus liquid," and Dripzyme were classified under Chapter Sub-Heading No. 38089340, and the demand for excise duty was upheld along with interest and penalty.

All seven appeals filed by the appellants against the adjudication orders were disposed of by maintaining the duty demand and modifying the amount of penalty under Section 25(1) of the Central Excise Rules, 2002.

The appellant contended that the products in issue are fertilizers and not plant growth regulators. It contains one or more fertilizing elements like nitrogen, phosphorus, or potassium. Even as per CBEC circular No. 392/25/98-CX, dated May 19, 1998, it is outside the purview of plant growth regulators, and the authorities below failed to appreciate the trade parlance evidence and expert opinion produced by them.

The Tribunal noted that there is a difference between fertilizer and plant growth regulators. A fertilizer will promote the growth of the plant by providing nutritional support and will not inhibit it, whereas a plant growth regulator stimulates plant growth without providing any nutrition to the plants. It’s like a tonic that promotes or inhibits growth by affecting the structure at the physiological level.

The tribunal has set aside the order as Godrej Zymegold is fertilizers and therefore the appellants have rightly classified their products.

Case Title: M/s. Godrej Agrovet Ltd. Versus Commissioner of CGST, Kolhapur

Case No.: Excise Appeal No. 86510 of 2015

Date: 03.05.2023

Counsel For Appellant: Rajesh Ostwal

Counsel For Respondent: A.K. Jha

Click Here To Read The Order