Zinc EDTA Not a Chemical Salt but a Fertiliser: CESTAT Chennai Sets Aside Reclassification and Duty Demand
Pranav B Prem
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Zinc EDTA imported by Coromandel International Ltd. is correctly classifiable as a fertiliser under Customs Tariff Item (CTI) 3105 9090, and not as a chemical or salt under CTI 2922 4990, as contended by the Revenue. The Bench of Ajayan T.V. (Judicial Member) and Ajit Kumar (Technical Member) allowed the appeal by concluding that Zinc EDTA contains nitrogen, an essential fertilising element, and is therefore covered by the expression “other fertilisers” under Chapter 31 of the Customs Tariff Act.
The appellant, engaged in the manufacture and sale of fertilisers, had imported Zinc EDTA describing it as a chelated micronutrient fertiliser. At the time of import, the appellant classified the product under CTI 3105 9090, claiming it to be a fertiliser containing zinc in a form easily absorbable by plants. The Department, however, took the view that the imported product was an organo-metallic complex consisting of acyclic amino acids and a zinc complex in conjunction with a di-sodium salt, meriting classification under CTI 29224990 as “salts of amino acids.” A show cause notice was issued proposing reclassification and demanding differential duty. The adjudicating authority confirmed the proposal, and the Commissioner (Appeals) upheld the order, rejecting the assessee’s claim that Zinc EDTA was a fertiliser.
Before the Tribunal, the primary issue was whether Zinc EDTA should be classified under Chapter 31 as a fertiliser or under Chapter 29 as a chemical compound. The Bench examined Note 6 to Chapter 31, which stipulates that the expression “other fertilisers” for the purposes of tariff heading 3105 applies only to “products of a kind used as fertilisers and containing, as an essential constituent, at least one of the fertilising elements nitrogen, phosphorus or potassium.” It was an admitted position that Zinc EDTA contained nitrogen. The Tribunal observed that the chapter note does not prescribe any minimum quantitative threshold for nitrogen to qualify as an essential constituent. The presence of nitrogen itself, therefore, satisfied the statutory condition.
The Department had argued that the nitrogen content was incidental and too minor to be treated as an essential fertilising element. The Tribunal rejected the contention, observing that once nitrogen is present and the product is of a kind used as fertiliser, the conditions of Note 6 are fulfilled. The Bench emphasised that the note does not require nitrogen to be the primary fertilising component, nor does it exclude products containing nitrogen in limited quantities. It found that the imported product was undeniably a fertiliser used in agriculture as a chelated micronutrient source for zinc, which reinforced the correctness of classification under CTI 3105 9090.
Referring to the competing classifications, the Tribunal noted that the Revenue’s approach was contrary to the principle that specific classification under the fertiliser chapter should prevail when the product is demonstrably used as a fertiliser and contains an essential fertilising element. The importer's description, the nature of the goods, and their agricultural use all confirmed that the classification adopted at the time of import was accurate.
Having held that Zinc EDTA squarely falls within the ambit of “other fertilisers” under Chapter 31, the Tribunal set aside the orders of the lower authorities. It upheld the assessee’s classification under CTI 3105 9090 and allowed the appeal, thereby annulling the reclassification and the consequent duty demand.
Appearance
Counsel for Appellant/ Assessee: Rohan Muralidharan
Counsel for Respondent/ Department: Sanjay Kakkar
Cause Title: M/s. Coromandel International Ltd. v. Commissioner of Customs
Case No: Customs Appeal No. 40440 of 2015
Coram: Ajayan T.V. (Judicial Member), Ajit Kumar (Technical Member)
