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2018 (7) TMI 1493 - AAR - GSTClassification of goods - rate of GST - MIDEL eN 1204 - MIDEL eN 1275 - What is the correct Harmonized System of Nomenclature (HSN) code and the applicable GST rate for our products MIDEL eN 1204 (rapeseed oil based dielectric transformer fluid) and MIDEL eN 1275 (soya oil based dielectric transformer fluid) in terms of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017? Held that - The products are not vegetable fats and vegetable oils per se - The products do not remain mere vegetable fat or mere vegetable oil. The impugned products are a distinct product which is known in the market as a dielectric transformer fluid - The products also contain additives, the information about which has also not been shared with this Authority. But the manufacturing process of these ingredients and the addition of additives leads to a distinct product being formed. There are no doubts that entry 88 and 90 of Schedule I of the Notification No. 1/2017-Central / State Tax (Rate) would not cover the impugned products - The impugned products are not covered by any entry of the Schedule in the Notification No. 2/2017- Central / State Tax (Rate) for goods exempted from GST. It is only the question of entry 90 or any other entry of the Notification No. 1/2017- Central / State Tax (Rate) which would cover the impugned products. Ruling - The product would fall in schedule entry 27 of Schedule II of the Notification No. 1/2017-Central /State Tax (Rate) under Tariff Heading 1518 and thereby taxable @ 6% each of Central Goods and Services Tax and Maharashtra Goods and Services Tax.
Issues Involved:
1. Classification of MIDEL eN 1204 and MIDEL eN 1215 under the Harmonized System of Nomenclature (HSN). 2. Determination of the applicable GST rate for MIDEL eN 1204 and MIDEL eN 1215. Detailed Analysis: 1. Classification of MIDEL eN 1204 and MIDEL eN 1215 under HSN: The applicant, M&I Materials India Pvt. Ltd., sought an advance ruling on the classification of their products MIDEL eN 1204 (rapeseed oil-based dielectric transformer fluid) and MIDEL eN 1215 (soya oil-based dielectric transformer fluid). They argued that these products should be classified under HSN code 15180039, which pertains to chemically modified vegetable oils, and should fall under Entry at S. No. 90 of Schedule I of Notification No. 1/2017-Central Tax (Rate), attracting a GST rate of 2.5%. The applicant contended that: - The products are chemically modified vegetable oils, more specifically covered under Entry at S. No. 90 of Schedule I. - The intention of the legislature and GST Council was to tax vegetable fats and oils at a lower rate of 2.5%. - Even if not classified under Entry at S. No. 90, the products should fall under Entry at S. No. 88 of Schedule I, which covers vegetable fats and oils that are partly or wholly hydrogenated, inter-esterified, re-esterified, or elaidinised. The jurisdictional officer, however, argued that the products are inedible mixtures or preparations of vegetable oils, thus falling under Entry at S. No. 27 of Schedule II, attracting a GST rate of 6%. 2. Determination of the applicable GST rate for MIDEL eN 1204 and MIDEL eN 1215: Upon examining the facts, the Authority for Advance Ruling (AAR) observed: - The products are distinct as dielectric transformer fluids and are not merely vegetable fats or oils. - The products are described as blends of natural triglyceride esters with performance-enhancing additives, making them inedible preparations. - The products do not retain their original fundamental structure as vegetable oils due to the addition of additives and the manufacturing process. The AAR concluded that: - The products do not fall under Entry 88 or 90 of Schedule I (2.5% GST rate) as they are not merely vegetable fats or oils. - The products are inedible preparations of vegetable oils, fitting the description under Entry 27 of Schedule II (6% GST rate). Order: The AAR ruled that MIDEL eN 1204 and MIDEL eN 1215 fall under Tariff Heading 1518, classified under Entry 27 of Schedule II of Notification No. 1/2017-Central/State Tax (Rate). Therefore, they attract a GST rate of 6% each for Central Goods and Services Tax and Maharashtra Goods and Services Tax.
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