N.B. Narayan Rao, Chairman -
(1.) THIS is the first appeal filed against the Advance Ruling given by the Authority for Clarification and Advance Ruling ('Authority' for short) given under Section 67 of APVAT Act, 2005 (for short, 'Act') in CCT's Reference No. PMT/P & L/A.R.Com./574/2005 dated 26 -02 -2007 in response to the application filed by the appellant for clarification and advance ruling in Form 570 dated 01 -03 -2006 in TIN No. 28790189512.
The appellant, a proprietorship concern, is a manufacturer and seller of certain agricultural products with names Cytozem +, Biozen +, Biolife SP, Biozen G, Danzem, Dhahush G, Dhanvarsh, Meliaza -G, etc., in liquid form, granules form and powder forms. Those goods were manufactured by the appellant from out of the raw materials like cow urine, sea weeds, vegetable waste, agricultural waste, sugarcane press mud, leaves of neam, seethaphal, Lanthana cramera weed, eucalyptus, vermin wash, cow dung, concentrated organic manure and stabilizers. He sought the clarification from the Authority under Section 67 of the Act on the rate of tax applicable to organic manure falling under item 26. The exact question that was referred to by the appellant to the Authority is - - - - - - - - - - - - what is the present rate of tax on organic manure which falls under item No. 26 of Schedule 1 of the Act? However, the question that was framed for the determination by Authority is as under. 'The rate of VAT applicable on biochemicals/organic fertilizers being manufactured and marketed by the appellant. The said question was answered by the said Authority to the effect that the products manufactured and marketed by the appellant are bio -fertilizers within the meaning of Item No. 19 of Schedule -IV to the Act with effect from 27 -08 -2005. Aggrieved of this advance ruling of the Authority, the present first appeal is before us.
(2.) THE Authority contended that the appellant also stated that they had developed the products as per HSN code 3101 - "animal or vegetable fertilizers, whether or not mixed together or chemical treated, fertilizers produced by the mixing or chemical treatment of animal or vegetable products"; and that, keeping in view of the nature of the products manufactured and marketed by the appellant and in view of the documents produced by the appellant before them the goods are bio -fertilizers. The appellant contended that the Authority erred in holding that the products manufactured by him, namely organic manure in the form of liquids, granules and powders, by using the decomposed plant materials like sea weeds, vegetable waste, sugarcane waste and animal refuge, including cow dung, etc., are bio -fertilizers; that the products under dispute are falling under HSN code 3101; that the expression "organic manure" can be inclusive of the products that are manufactured by him from out of the wastage of animals and plants, including the wastage of sea weeds; that the organic manures are covered under Item No. 26 of Schedule I to the Act; that the HSN code 3101 is given by the statute itself; that the HSN code 3101 can be construed of taking into its fold the organic manures also; that the animal or vegetable fertilizers means the wastage of animals and plants; that the products manufactured by him like Curex, Biolife SP, Cytozem+, Biozen G, etc. are nothing but organic fertilizers; that they are consisting of raw materials like cow dung, sea weeds, vegetable wastage, agricultural wastage, sugarcane press mud, leaves of neam & seethaphal, vermin wash, concentrated organic manure, stabilizers, potential with uric acids, volatile fatty acids, organic nutrients, enzymes, etc; that though one of the products produced by him namely 'Biolife SP' consists of the expression 'Bio' in its name, it cannot be said that the said commodity is a bio -fertilizer; that the Authority ought to have gone through the process adopted by him to produce the above mentioned raw materials; that though the Authority stated that they have gone through the material placed before them by the appellant, they have in fact not taken such materials into consideration to arrive at the conclusion that the goods sold by him are bio -fertilizers; that there is no chemical or other similar material used in their preparation and hence, the products under dispute do not become fertilizers; that the Authority ought to have considered the opinions and clarifications issued by the research institutions, experts, and scientists and the same can be taken into consideration for the classification of the products as also laid down by the Hon'ble Supreme Court of India; that the products under dispute are fertilizers consisting of plant and animal refuse, thoroughly mingled and composed in heaps and a certain procedure is followed to heap the crop residues; that unless and until the products are consisting of some chemicals, they do not amount to bio -fertilizers; that the organic manure manufactured by them does not consists of any living organism; that the organic manures are nothing but wastes of plants, animals and sea weeds and are used as fertilizers; that the organic manures that are being produced cannot be treated as fertilizers consisting of chemicals or even bio -fertilizers; that only the commodities consisting of chemicals alone can be called as fertilizers; that the Authority failed to follow its own ruling given in CCT's Reference No. PMT/P & L/A.R.Com/281/2005 dated 25 -08 -2005, as per which the organic manure is to be allowed exemption under Section 7 of the Act.
PROVISIONS OF LAW: -
(3.) (a) The item 26 of Schedule -I of the Act reads as under: -
"26. organic manure."
(b) The item 19 of Schedule -IV reads as under: -
"Chemical fertilizers, bio -fertilizers and bone meal including mixtures, or nutrient elements such as iron, zinc, copper, and biological derivatives such as enzymes, coenzymes and Aucines."