2019 (10) TMI 1089 - AAR - GST

Classification of goods - Pooja oil - classified under tariff item 1518 of Schedule-I (taxable at 5%.) or Schedule-II (taxable at 12) of N/N. 01/2017-CT(R) dated 28.06.2017, as amended from time to time - HELD THAT - It is an admitted fact that the said product is manufactured by mixing 5 edible oils i.e. rice bran oil, coconut oil, castor oil, mahua oil and Gingely Oil, in an agreed percentage and then blended with fragrance. The process of addition of perfume to the mixture of edible oils converts the said mixture into an inedible mixture. An inedible mixture of vegetable oils are specifically mentioned by and covered under Sl. No. 27 in Schedule II. The entry at Sl. No. 90 in Schedule I applies to vegetable oils which have been subject to processes like boiling, oxidation, dehydration, sulphurisation, blowing, polymerization and by heat in vacuum or in inert gas or otherwise chemical modification. The resultant product remains edible despite undergoing the aforementioned processes. However once fragrance has been added to the mixture of several edible oils, the resultant product becomes inedible and entry at Sl. No. 27 of Schedule II specifically covers inedible mixtures of vegetable oils. Therefore the product pooja oil finds a very specific entry in Schedule II. Thus it is more appropriately covered under Sl. No. 27 in Schedule II of the said Notification and accordingly taxable at 12% GST.

Summary

Issues: Classification of "Pooja Oil" under tariff item 1518 of Notification No. 01/2017-CT(R) dated 28.06.2017 - Applicability of tax rates at 5% or 12%.

Detailed Analysis:

Issue 1: Classification of "Pooja Oil" under tariff item 1518:
The applicant, a wholesale dealer in edible oils, sought an advance ruling on whether their product, "Pooja Oil," should be classified under tariff item 1518 of the notification. The product is a mixture of rice bran sesame oil, coconut oil, and mahua oil with added fragrance. The applicant argued that since the product is made of vegetable oils and not animal fats, it should be classified under Schedule-I, taxable at 5% GST.

Issue 2: Coverage under Schedule-I or Schedule-II of the Notification:
The key contention revolved around whether "Pooja Oil" should be covered under entry number 90 of Schedule-I or entry number 27 of Schedule-II of the notification. The applicant claimed that even if the product could be classified under Schedule-II, they were entitled to adopt the classification beneficial to them under Schedule-I, citing relevant Supreme Court judgments.

Analysis of Findings:
During the personal hearing, the authorized representative reiterated the facts, and the Authority considered the submissions along with the relevant provisions of the CGST and KGST Acts. The Authority clarified that unless specified, references to the CGST Act also encompass the KGST Act. The critical issue was the classification of "Pooja Oil" under the tariff item 1518 and its coverage under the notification for tax rate determination.

The Authority analyzed the provisions of the notification and noted that the product, a mixture of edible oils blended with fragrance, transforms into an inedible mixture. Comparing the entries in Schedule-I and Schedule-II, it was observed that inedible mixtures of vegetable oils specifically fell under Schedule-II. Therefore, the Authority ruled that "Pooja Oil" should be classified under entry number 27 of Schedule-II, making it taxable at 12% GST under the respective Acts.

Conclusion:
The ruling concluded that "Pooja Oil," classified under tariff heading 1518, as an inedible mixture, falls under entry number 27 of Schedule-II of the notification, thereby subject to a tax rate of 6% under the CGST Act, 6% under the KGST Act, and 12% under the IGST Act.

This detailed analysis provides an insight into the classification and tax treatment of "Pooja Oil" as per the Advance Ruling Authority's decision based on the specific provisions and contentions presented by the applicant.