2020 (1) TMI 65 - AAAR - GST

Classification of goods - rate of GST - Pooja Oil - whether it is at 5% as per entry Sl.No 90 of Schedule I to Notification No 01/2017 CT (R)/IT (R) dt 28.06.2017 or at 12% as per entry Sl.No 27 of Schedule II of the said Notifications? - HELD THAT - Pooja Oil which is a mixture of 5 different vegetable oils will not be covered under Chapter headings 15.01 to 15.15 as the said headings pertain to either animal fats and oils or vegetable oils and its fractions obtained from a single plant source. Further. Pooja Oil manufactured by the Appellant does not undergo any chemical modification processes such as hydrogenation inter-esterification re-esterification or elaidinization and therefore the Pooja Oil is not classifiable under Heading 15.16. The Heading 15.17 is also not applicable to Pooja Oil as it covers margarine and other edible mixtures of vegetable oils and fats and their fractions other than those which have been obtained by the processes mentioned in Heading 15.16. The first part of Heading 15.18 pertains to products which are obtained by subjecting them to processes which modify their chemical structure or other properties but at the same time retain their original fundamental character. It is the claim of the Appellant that the Pooja Oil is classifiable under Chapter sub-heading 1518 00 39. The said sub-heading pertains to other than edible grade vegetable oils and fats (other than linseed oil and dehydrated castor oil) which have been obtained by any of the processes mentioned in the heading i.e. boiled oxidized dehydrated sulphurised blown polymerized by heat in vacuum or in inert gas or otherwise chemically modified. The Appellant has not come forth with any evidence to prove that the Pooja Oil manufactured by them by mixing five different vegetable oils and blending with fragrance brings about a modification in the chemical structure or any other properties of the oils while retaining the original fundamental structure - the manufacture of Pooja Oil does not involve subjecting the five different vegetable oils to any of the processes mentioned above. The five vegetable oils (i.e. rice bran oil. sesame oil (gingelly oil) coconut oil. castor oil and mahua oil) are merely mixed in an agreed percentage in a large tank and later blended with fragrance to form the resultant product i.e Pooja Oil. Therefore the Pooja Oil cannot be classified under the sub-heading 1518 00 39. The second category in Heading 15.18 covers inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this Chapter not elsewhere specified or included - thus Pooja Oil being an inedible mixture of five different vegetable oils which is blended with a fragrance and not included anywhere else in Chapter 15 is more appropriately classifiable under the subheading 1518 00 40 of the Customs Tariff. Thus Pooja Oil is classifiable under sub-heading 1518 00 40 of the Customs Tariff as inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this Chapter not elsewhere specified or included. The Appellant has drawn our attention to the advance ruling given by Andhra Pradesh Advance Ruling Authority in the case of IN RE AGARWAL INDUSTRIES PVT. LTD. 2018 (9) TMI 973 - AUTHORITY FOR ADVANCE RULING - ANDHRA PRADESH to buttress their argument that the Pooja Oil is covered under entry Sl.No 90 of Schedule I - We have gone through the said ruling dated 08.06.2018. However we are not inclined to consider the same for the reason that primarily the advance ruling orders are binding only on the applicant who has sought the advance ruling and on the concerned officer or the jurisdictional officer in respect of the applicant - the ruling does not have any persuasive weightage. The order passed by Advance Ruling authority upheld - appeal dismissed.

Summary

Issues Involved:
1. Classification of "Pooja Oil" under tariff heading 1518.
2. Determination of applicable GST rate for "Pooja Oil".

Issue-Wise Detailed Analysis:

1. Classification of "Pooja Oil" under tariff heading 1518:

The Appellant, a wholesale dealer in edible oil, manufactures "Pooja Oil," a mixture of rice bran oil, sesame oil, coconut oil, castor oil, and mahua oil, with added fragrance. The core issue is whether "Pooja Oil" should be classified under tariff item 1518 of Schedule-I (taxable at 5%) or Schedule-II (taxable at 12%) of Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017.

The Appellant argued that Chapter Heading 1518 covers vegetable fats and oils, whether or not chemically modified, and does not distinguish between edible and inedible oils. They contended that since "Pooja Oil" is made from vegetable oils, it should be classified under the more specific entry in Schedule-I.

The Authority for Advance Ruling (AAR) classified "Pooja Oil" under entry number 27 of Schedule-II, as an inedible mixture of vegetable oils, thus taxable at 12%. The Appellant challenged this, asserting that the product should fall under Schedule-I, emphasizing that the entry does not specify that oils must be edible to qualify.

Upon review, it was determined that "Pooja Oil," being a mixture of five different vegetable oils blended with fragrance, does not undergo chemical modification processes like boiling, oxidization, dehydration, etc., specified in entry 90 of Schedule-I. Therefore, it does not fit under the sub-heading 1518 00 39. Instead, it is classifiable under sub-heading 1518 00 40 as an inedible mixture of vegetable oils not specified elsewhere in Chapter 15.

2. Determination of applicable GST rate for "Pooja Oil":

The applicable GST rate depends on the classification under Schedule-I or Schedule-II. Entry 90 of Schedule-I covers vegetable fats and oils that have undergone specific processes, while entry 27 of Schedule-II includes inedible mixtures of vegetable fats or oils not specified elsewhere.

The Appellate Authority concluded that "Pooja Oil" is an inedible mixture of vegetable oils and is not covered under entry 90 of Schedule-I. Instead, it falls under entry 27 of Schedule-II, making it taxable at 12% GST (6% CGST and 6% KGST).

The Appellant's reliance on Rule 3(a) of the General Rules of Interpretation and various judicial precedents to argue for a more beneficial classification was deemed unnecessary, as the product was conclusively classified under sub-heading 1518 00 40.

The reference to the Andhra Pradesh Advance Ruling in the case of M/s Agarwal Industries Pvt Ltd was not persuasive, as it did not detail the manufacturing process of the product in question.

Conclusion:

The Appellate Authority upheld the AAR's decision, confirming that "Pooja Oil" is classifiable under sub-heading 1518 00 40 and taxable at 12% GST. The appeal filed by the Appellant was dismissed on all counts.