Modu, a commander who had been on the lists of wanted terrorists, was arrested in Damboa, North East Borno State.
The Nigerian army has been conducting operations to decimate fighters of Boko Haram many of whom have been pushed to the fringes of Lake Chad region which borders with Chad, Niger and Cameroon.
At least more than 97,000 people have been killed, social infrastructure destroyed and commercial activities, including agriculture, paralysed since 2009 when Boko Haram started an insurgent in the North East.
A military spokesman said the federal government banned urea fertiliser because of its use as a major component for manufacturing IEDs by terrorists.
The spokesman said the terrorists were planning to unleash terror on innocent Nigerians to remain relevant after many of their members were killed in security operations.
The army said 281 bags of 50kg of urea fertiliser were seized and two distributors arrested during the raid on Wednesday.
