2021 (11) TMI 292 - AAR - GST

Concessional rate of tax @ 0.1% or not - supply of HDPE Drums for use by the manufacturer of Ethyl Alcohol in his factory for packing his manufactured goods and supply to merchant exporter - Applicability of N/N. 41/2017-IT (Rate) - HELD THAT - The Notification stipulates certain conditions for supply of goods to the merchant exporter at concessional rate of GST at 0.1%. To avail the concessional rate of GST, the registered recipient is required to move the goods directly from the place of registered supplier to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported, or to a registered warehouse from where the goods shall be further moved to the Port, Inland Container Deport, Airport or Land Customs Station. In case the merchant exporter procures goods from different registered suppliers, the merchant exporter should move such supplies to the registered warehouse, aggregate such procured goods at the warehouse and should move the goods to the Port, Inland Container Depot, Airport or Land Customs Station from where the goods are exported. In the instant case, the applicant supplies HDPE drums by raising the invoice under Billed to Merchant Exporter and shipped to the manufacturer of the ethyl alcohol. Thus, the impugned goods are not moved directly to the Port, Inland Container Deport, Airport or Land Customs Station or to a registered warehouse, which is a pre-condition for availing concessional rate of GST. Therefore, the applicant is not entitled to supply the impugned goods at the concessional rate of GST at 0.1%.

Summary

Issues Involved:
1. Admissibility of the application under Section 97(2)(b) of the CGST Act 2017.
2. Interpretation of Notification No. 41/2017-IT (Rate) regarding concessional rate of tax on supply of HDPE Drums for packing Ethyl Alcohol.

Admissibility of the Application:
The application filed by M/s. Time Technoplast Limited seeking an Advance Ruling under Section 97 of the CGST Act 2017 is deemed admissible as it pertains to the applicability of a notification issued under the CGST/KGST Act 2017.

Interpretation of Notification No. 41/2017-IT (Rate):
The applicant, a manufacturer of packaging material, supplies HDPE drums to a merchant exporter for packing Ethyl Alcohol. The applicant sought clarification on whether they are eligible for the 0.1% concessional rate of tax under Notification No. 41/2017-IT (Rate). The notification requires goods to be moved directly from the supplier to the Port or a registered warehouse for export. In this case, the HDPE drums supplied by the applicant were not moved directly to the Port or a registered warehouse, thus disqualifying them from the concessional rate of tax.

Findings & Discussion:
The Authority for Advance Rulings analyzed the applicant's submission and the relevant provisions of the CGST Act. The applicant's claim for the concessional rate of tax was based on the usage of HDPE drums for packing Ethyl Alcohol exported by the merchant exporter. However, the conditions specified in Notification No. 41/2017-IT (Rate) mandate direct movement of goods to the Port or a registered warehouse for export, which was not met in this case.

Ruling:
The Authority ruled that the applicant is not entitled to the 0.1% concessional rate of tax under Notification No. 41/2017-IT (Rate) for the supply of HDPE Drums used for packing Ethyl Alcohol. The decision was based on the failure to comply with the specific conditions outlined in the notification regarding the movement of goods for export.