2020 (7) TMI 510 - AAR - GST

Classification of goods - Shatamrut Chyavan - classified under TSH 2309 90 10 of Customs Tariff Act, 1975 or otherwise - benefit of Sr. No. 102 of Notification No. 02/2017 - Central Tax (Rate) dated 28.06.2017 - Whether the goods falling under TSH 2309 90 10 of Customs Tariff Act, 1975 as adopted to GST can he treated as waste of sugar manufacture, whether or not in the form of pellets under heading 2303? HELD THAT - The subject product is manufactured out of sugarcane molasses, which is the major ingredient. Applicant is also adding other ingredients along with sugarcane molasses in the subject product, to increase the nutritional value of the sugarcane molasses. Applicant has been classifying the impugned product under Chapter No. TSH 2309 90 10, attracting NIL rate of GST and now wants to classify the same under Chapter 2303 of the Customs Tariff Act, 1975 as adopted by GST Tariff. The reason put forth by the applicant to classify the subject product under Chapter Heading 2303 is that the said product is only a nutritional supplement to the cattle feed and cannot be considered as cattle feed in isolation. The subject product is a complete animal feed supplement manufactured out of molasses mixed with 15 other ingredients to increase the nutrition value of the feed supplement. From the submissions made by the applicant and view of the above Chapter Notes, it is found that the subject product is nothing but prepared animal feed and therefore the same would fall under the said Chapter Heading 23.09 - the subject product has been rightly classified by the applicant under Chapter Heading 23.09 and the said product, falling under TSH 2309 90 10 of Customs Tariff Act, 1975 as adopted to GST, attracts NIL rate as per Sr. No. 102 of Notification No. 02/2017 - Central Tax (Rate) dated 28.06.2017. Whether the goods falling under TSH 2309 90 10 of Customs Tariff Act, 1975 as adopted to GST can be treated as waste of sugar manufacture, whether or not in the form of pellets under heading 2303 attracting 5% GST per Schedule I, Sr. No. 104 of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 or not? - HELD THAT - The question is general in nature and does not appear to be connected to a particular product being manufactured by the applicant or proposed to be manufactured. Thus the said question is not relation to supply of goods or services or both, being undertaken or proposed to be undertaken by the applicant. Also, the said question is not on matters or questions specified in subsection 2 of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - the question is thus not answered.

Summary

Issues Involved:
1. Classification of 'Shatamrut Chyavan' under TSH 2309 90 10 attracting NIL rate of GST.
2. Whether 'Shatamrut Chyavan' can be classified as 'waste of sugar manufacture' under heading 2303 attracting 5% GST.

Issue-wise Detailed Analysis:

1. Classification of 'Shatamrut Chyavan' under TSH 2309 90 10 attracting NIL rate of GST:

The applicant, M/s Madhurya Chemicals, sought an advance ruling on whether 'Shatamrut Chyavan', a complete animal feed supplement made primarily from sugarcane molasses and other ingredients, falls under TSH 2309 90 10 of the Customs Tariff Act, 1975, attracting a NIL rate of GST as per Sr. No. 102 of Notification No. 02/2017 - Central Tax (Rate) dated 28.06.2017.

The applicant argued that the product, being a nutritional supplement to cattle feed, should be classified under Chapter 2303 attracting 5% GST. However, the jurisdictional officer contended that 'Shatamrut Chyavan' should be classified under Chapter 2309 90 10, attracting NIL GST, as it is a complete food supplement used for cattle feed only and not capable of any general use.

Upon reviewing the submissions, the Authority for Advance Ruling (AAR) observed that the product is manufactured from sugarcane molasses mixed with other ingredients to enhance nutritional value. The AAR referred to Chapter 23 of the Customs Tariff Act, 1975, which covers residues and waste from food-preparing industries and products used as animal feeding stuffs. Specifically, Chapter Heading 23.09 includes products used in animal feeding obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material.

The AAR concluded that 'Shatamrut Chyavan' is a prepared animal feed falling under Chapter Heading 23.09, attracting a NIL rate of GST as per Sr. No. 102 of Notification No. 02/2017 - Central Tax (Rate) dated 28.06.2017. The classification under TSH 2309 90 10 was deemed correct.

2. Whether 'Shatamrut Chyavan' can be classified as 'waste of sugar manufacture' under heading 2303 attracting 5% GST:

The applicant also questioned whether the product could be classified under heading 2303 as 'waste of sugar manufacture', attracting 5% GST as per Schedule I (Sr. No. 104) of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017. The jurisdictional officer opposed this, stating that the product, being a complete food supplement for cattle, does not fall under the waste category of sugar manufacture.

The AAR noted that Chapter Heading 23.03 covers residues and waste from starch manufacture, beet-pulp, bagasse, and other waste of sugar manufacture, but explicitly excludes molasses resulting from the extraction or refining of sugar. Since 'Shatamrut Chyavan' is a prepared animal feed and not a waste product, it does not fall under Chapter Heading 23.03.

The AAR refrained from answering the second question, noting that it was general in nature and not related to a specific product being manufactured or proposed to be manufactured by the applicant.

Order:

1. The classification of 'Shatamrut Chyavan' under TSH 2309 90 10 of the Customs Tariff Act, 1975, attracting NIL rate of GST as per Sr. No. 102 of Notification No. 02/2017 - Central Tax (Rate) dated 28.06.2017 is correct.
2. The question regarding classification under heading 2303 was not answered.