Boronated Calcium Nitrate Not Eligible For Concessional Duty As 'Calcium Nitrate': CESTAT Ahmedabad

On 1 April, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that “Boronated Calcium Nitrate” is a distinct product from “Calcium Nitrate” and is therefore not eligible for concessional customs duty under Notification No. 50/2017-Cus.

A Bench comprising Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Satendra Vikram Singh dismissed three appeals filed by Yara Fertilizers India Pvt. Ltd., holding:

“Boronated Calcium Nitrate imported by the appellant is a different product than Calcium Nitrate and therefore, the product is not eligible to concessional rate of duty under Entry No.225(I)(b) of Notification No.50/2017-Cus.”

The dispute arose from imports made by the appellant during 2019, wherein the product “YARALIVA Nitrabor Calcium Nitrate with Boron” was classified under CTH 31026000 and cleared at a concessional duty rate of 5% under Sr. No. 225(I)(b) of Notification No. 50/2017-Cus, applicable to water-soluble fertilizers such as Calcium Nitrate.

The Department contested the classification, contending that the imported product, being a boronated variant, is a fortified fertilizer and not pure Calcium Nitrate, and therefore ineligible for the exemption.

The authorities issued show cause notices under Section 28(1) of the Customs Act, 1962, demanding differential duty along with interest under Section 28AA and penalty under Section 117. The adjudicating authority confirmed the demands. The Commissioner (Appeals) upheld the order but set aside the penalty. Aggrieved, the appellant approached the Tribunal.

Before the Tribunal, the appellant argued that Calcium Nitrate was the major constituent of the imported product and that the goods had been classified under CTH 31026000, which covers Calcium Nitrate. Since the notification extends concessional duty to Calcium Nitrate, the appellant contended that the appellate authority wrongly denied the benefit of the notification.

The Revenue argued that Boronated Calcium Nitrate is separately classified as a “fortified fertilizer” under the Fertilizer (Control) Order, 1985, and is materially different from Calcium Nitrate.

The Tribunal upheld the Department's position and held that issuance of a show cause notice under Section 28 is valid even without a prior challenge to the assessment order. It clarified that reassessment can be undertaken through the statutory mechanisms provided under the Act.

On merits, the Tribunal observed that the Fertilizer (Control) Order distinctly classifies Calcium Nitrate and Boronated Calcium Nitrate under separate categories, with different chemical compositions and solubility levels. While Calcium Nitrate is categorized as a 100% water-soluble fertilizer, Boronated Calcium Nitrate falls under fortified fertilizers with 99.5% solubility and an altered nutrient composition.

The Bench stated:

"As regards eligibility to concessional rate of duty under referred Notification, we find that the product, Boronated Calcium Nitrate is imported by the appellant is specified at Sr. No.9 of Entry No.1 (h) covering fortified fertilisers, whereas, “Calcium Nitrate” which is covered under the referred Notification is specified at Sr. No.3 of 100% water soluble complex fertiliser given at category 1(i) of the Fertiliser (Control) Order,1985. Thus, even, the Fertiliser Control Order also treats both the products differently as they have altogether different constituents."

Rejecting the appellant's argument based on “essential character,” the Tribunal held that even minor compositional differences can be decisive when the exemption notification specifically covers a defined product.

The Bench further stated:

"Boronated Calcium Nitrate imported by the appellant is a different product than Calcium Nitrate and therefore, the product is not eligible to concessional rate of duty under Entry No.225(I)(b) of Notification No.50/2017-Cus."

Accordingly, the Tribunal upheld the differential duty demands, and dismissed all three appeals filed by the appellant.

For Appellant: Manish Jain, Advocate

For Respondent: Girish Nair, Assistant Commissioner