2021 (1) TMI 894 - AAAR - GST

Classification of goods - Shatamrut Chyavan - falling under TSH 2309 90 10 of Customs Tariff Act, 1975 as adopted to GST attracting NIL rate as per Sr. No. 102 of Notification No. 02/2017 - Central Tax (Rate), dated 28.06.2017 or can be treated as waste of sugar manufacture, whether or not in the form of pellets under heading 2303 attracting 5% of IGST as per Schedule I (Sr. No. 104) of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 or not? - chalenge to AAR decision. Whether the classification of the impugned product, falling under TSH 2309 90 10 of the Customs Tariff Act, 1975, as adopted to the CGST Act, 2017, attracting NIL as per the List of Exempted Goods in terms of SI. No 102 of Notification No. 02/2017 - Central Tax (Rate), dated 28.06.2017, is correct or not? - HELD THAT - The impugned product is also advertised, marketed, and sold, as cattle feed, which when fed in certain doses with other fodder to the cattle, like cows, buffaloes, goat, etc., is purported to increase the production of milk from such cattle along with increasing their immunity against the diseases. Thus, it is evident that the impugned product is perceived as cattle food having the aforementioned specific uses - The explanatory notes clearly say that molasses is not covered under heading 2303 but under 1703. A larger part of the Appellant s product consists of molasses and molasses itself are covered under heading 1703. Moreover, it is also made clear that molasses prepared as animal food fall in heading 2309. Therefore, it is clear that the product of the Appellant does not fall under Heading 2303 but falls under Heading 2309. The Appellant has, neither in the written submissions nor during the hearing, given any concrete reasons or grounds to support his contention that the product does not fall under Heading 2309 but under Heading 2303. As regards the Appellant s contention that the impugned product is not fed to the cattle in isolation but the same is fed by mixing with the other fodders in fixed prescribed dosage, and thereby, not deserving to be qualified as cattle feed, it is opined that the said fact about the impugned product would not have any bearing, whatsoever, on the status of the said impugned product which remains the compounded animal feed having specific use in animal feeding. CBIC Circular No. 80/54/2018- GST, dated 31.12.2018, issued on the subject of the clarification of the GST rates and classification of goods, which stipulates that while deciding the classification of product claimed as animal feed supplements, it may be necessary to ensure that the said animal feed supplements are ordinarily or commonly known to the trade as products for a specific use in animal feeding. HS Code 2309 would cover only such products, which in the form supplied, are capable of specific use as food supplement for animal and not capable of any general use. As it has been established that the impugned product is an animal feed having specific use, viz.- increasing the milk production of the cattle and increasing the immunity of the cattle to fight diseases, and the said impugned product is also known in the market as the cattle feed supplement only, therefore, the said impugned product would be classified as animal feed supplement, and accordingly would merit classification under the Chapter Heading 2309 and under the Tariff Item 2309 90 10, and would not attract any GST in terms of Si. No. 102 of the Notification No. 2/2017-C.T. (Rate), dated 28.06.2017. Whether the impugned product can be considered as waste of sugar manufacturing as being purported by the Appellant, and accordingly be classified under the Chapter Heading 2303 - HELD THAT - The question does not fall within the purview of Section 97 (2) of the CGST Act. 2017. The question is not in relation to supply of goods or services or both, being undertaken or proposed to be undertaken by the Appellant. The MAAR cannot decide whether a specific product can be said to be a waste of sugar manufacture as the said question is not within the scope of Section 97 of the CGST Act. 2017. Also, the Appellant has not given any rebuttal of the finding of the MAAR that the said question does not fall under Section 97 of the CGST Act, 2017. The ruling of AAR upheld.

Summary

Issues Involved:

1. Classification of the product "Shatamrut Chyavan" under TSH 2309 90 10.
2. Whether the product can be classified under Heading 2303 as "waste of sugar manufacture."

Detailed Analysis:

Issue I: Classification of the Product under TSH 2309 90 10

The Appellant, engaged in manufacturing and marketing "Shatamrut Chyavan," classified the product under Heading 2309 of the Customs Tariff Act, 1975, availing exemption from GST as per Sl. No. 102 of Notification No. 2/2017-C.T. (Rate), dated 28.06.2017. The product is marketed as a compounded animal feed that enhances milk production and immunity in cattle.

The Maharashtra Authority for Advance Ruling (MAAR) confirmed this classification, stating that the product falls under chapter heading 2309, attracting 'NIL' rate as per the aforementioned notification.

The Appellant argued that the product should be classified under Heading 2303, which attracts a 5% GST rate, citing that the primary ingredient is molasses, a by-product of sugar manufacturing.

Upon review, the appellate authority upheld the classification under Heading 2309. The product's ingredients, including molasses and various ayurvedic plants, justify its classification as compounded animal feed. The product is advertised and marketed specifically for cattle feed, enhancing milk production and immunity, thus fitting the description under Heading 2309.

The authority referenced the Explanatory Notes to the HSN and CBIC Circular No. 80/54/2018-GST, which clarify that molasses combined with other feeds fall under Heading 2309. The product is not capable of any general use and is specifically known in the market as a cattle feed supplement.

Issue II: Classification under Heading 2303

The Appellant's second question was whether the product could be classified under Heading 2303 as "waste of sugar manufacture." The MAAR dismissed this question, stating it does not relate to the supply of goods or services by the Appellant and falls outside the ambit of Section 97(2) of the CGST Act, 2017.

The appellate authority agreed, noting that molasses, a significant component of the product, is classified under Heading 1703, not 2303. The product, being a compounded animal feed, does not fit the description of "waste of sugar manufacture."

The authority reiterated that the question does not fall within the purview of Section 97(2) of the CGST Act, 2017, and thus, the MAAR's decision to not answer this question was appropriate.

Conclusion:

The appellate authority upheld the MAAR's ruling, confirming the classification of "Shatamrut Chyavan" under Heading 2309, attracting a 'NIL' rate of GST. The appeal filed by the Appellant was dismissed, and the second question regarding classification under Heading 2303 was deemed outside the scope of the Advance Ruling provisions.