2021 (7) TMI 929 - AAR - GST

Classification of goods - HSN code - rate of tax - wastes - Cinder Half-burnt Coal / Char Dolachar - ESP / Bag Filter Dust generated during the process of manufacturing Sponge Iron - levy of GST Compensation Cess @ ₹ 400/- per tonne be applicable on sale of waste. HELD THAT - The Hon ble Apex Court of India in the case of UNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. 2003 (10) TMI 47 - SUPREME COURT held that unburnt or partly burnt pieces of coal have no capacity to produce flame because of low or reduced calorific value and therefore classified such coal/dust as Cinder. Further, Hon ble CESTAT in the case of CC, CE ST, HYDERABAD-II VERSUS M/S REACTIVE METALS OF INDIA PVT LTD., M/S BINJUSARIA SPONGE POWER PVT LTD. 2017 (9) TMI 1547 - CESTAT HYDERABAD held that by Product Char Dolochar emerging during manufacture of Sponge Iron is classifiable under CETH 2619 00 90 - Similar stand has been taken by Hon ble CESTAT in the case Bellary Steel Alloys Ltd v. CCE., 2005 (10) TMI 180 - CESTAT, BANGALORE . W.R.T ESP bog/filter dust, we hold that they are also classifiable under 2619 00 90. Thus, both unburnt or half-burnt coal and dust falls under entry 28 of Schedule III of Notification No.01/2017 Dated 28.06.2017 and attracts 18% tax under IGST and 9% under CGST/SGST Acts.

Summary

Issues: Classification of waste products (Cinder Half-burnt Coal/Char Dolachar and ESP/Bag Filter Dust) generated during the manufacturing of Sponge Iron under DRI process; Applicability of GST Compensation Cess on the sale of waste (Cinder Half-burnt coal).

Classification of Waste Products:
The applicant, a manufacturer of taxable goods, sought an advance ruling on the classification of waste products generated during the manufacturing of Sponge Iron. They argued that the products, namely Cinder Half-burnt Coal/Char Dolachar and ESP/Bag Filter Dust, should be classified under HSN Code "2619 00 90" or "2621 90 00." The applicant contended that these waste products do not qualify as "fuel manufactured from coal" and should be classified as waste from the manufacture of iron or steel. The Authority considered the submissions and relevant facts, citing previous judgments that supported the classification of such waste products under specific tariff items. The final ruling classified both waste products under HSN Code "2619 00 90."

Applicability of GST Compensation Cess:
The applicant also sought clarification on whether the GST Compensation Cess at ?400 per tonne would be applicable on the sale of waste, specifically Cinder Half-burnt coal, generated during the manufacturing process. The Authority examined relevant case law and determined that both unburnt or half-burnt coal and dust fell under entry 28 of Schedule III of Notification No. 01/2017, attracting 18% tax under IGST and 9% under CGST/SGST Acts. Consequently, the ruling stated that the GST Compensation Cess would not be applicable on the sale of waste, including Cinder Half-burnt coal, generated during the manufacturing process of Sponge Iron under DRI process.

Conclusion:
The Advance Ruling Authority classified the waste products, Cinder Half-burnt Coal/Char Dolachar and ESP/Bag Filter Dust, under HSN Code "2619 00 90." Additionally, it ruled that the GST Compensation Cess at ?400 per tonne would not be applicable on the sale of waste, specifically Cinder Half-burnt coal, generated during the said manufacturing process. The decision was based on detailed analysis of the classification criteria and tax implications as per the relevant provisions of the GST Acts and previous judicial interpretations.