2018 (10) TMI 308 - AAR - GST

Classification of goods - RBD Palm Stearin - Whether RBD Palm Stearin would fall under Chapter 1511 Palm Oil and its fractions, whether or not refined but not chemically modified or under Chapter 382311 Industrial monocarboxylic fatty acid, acid oils from refining, stearic acid, Palm Stearin? Held that - Now there is specific Tariff Item 1511 90 30 for Refined bleached deodorized palm stearin . Therefore, the product Refined bleached deodorized palm stearin is classifiable under Chapter Heading 1511 with Tariff Item 1511 90 30 in view of Rule 1 and Rule 3(a) of the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975 - It is observed that CBEC Circular No. 81/2002-Customs dated 3.12.2002 was issued in the context of the then existing entries in the First Schedule to the Customs Tariff Act, 1975. Similarly, in the judgement of Hon ble Supreme Court, in the case of Commissioner of Central Excise, Customs & Service Tax, Vishakhapatnam Vs. Jocil Ltd. 2010 (12) TMI 24 - SUPREME COURT OF INDIA , it was held that palm stearin is specifically identified in Chapter sub-heading No. 3823 11 as Palm Stearin , and further differentiated as Crude and RBD in sub-heading Nos. 3823 11 11 and 3823 11 12 respectively. Ruling - The product Refined Bleached Deodorised Palm Stearin, supplied by M/s. Gokul Agro Resources Ltd. is classifiable under Heading 1511.

Summary

Issues Involved:
1. Classification of the product 'Refined Bleached Deodorized (RBD) Palm Stearin' under the appropriate Chapter of the Customs Tariff Act, 1975.

Issue-wise Detailed Analysis:

1. Classification of RBD Palm Stearin:

The applicant, M/s. Gokul Agro Resources Limited, engaged in various oil processing activities, sought an advance ruling to determine whether RBD Palm Stearin falls under Chapter 1511 or Chapter 3823 of the Customs Tariff Act, 1975. The applicant argued that RBD Palm Stearin, derived from refined palm oil through a fractionation process, should be classified under Chapter 1511, which covers "Palm Oil and its fractions, whether or not refined but not chemically modified." This classification is supported by the fact that RBD Palm Stearin is used for food applications meant for human consumption, whereas Chapter 3823 primarily deals with industrial products.

2. Historical Classification and Amendments:

The applicant provided historical data, including Central Excise Invoices and Returns, showing that they previously classified RBD Palm Stearin under Chapter 3823 and paid excise duty accordingly. However, with the introduction of the Budget 2017 and subsequent amendments, a new tariff item (HSN 1511 90 30) was created specifically for "Refined Bleached Deodorized Palm Stearin" to align with the World Customs Organization (WCO) classification decisions. This amendment led to confusion regarding the correct classification under the GST Tariff.

3. Views of the Central Goods and Services Tax and Central Excise Commissionerate:

The Commissionerate referred to Circular No. 81/2002-Customs, which distinguished between triglycerides (esters) of fatty acids falling under heading 15.11 and free fatty acids under heading 38.23. The distinction is based on chemical composition, with triglycerides being different from free fatty acids.

4. Relevant Legal Provisions and Interpretations:

The judgment considered the relevant entries in the First Schedule to the Customs Tariff Act, 1975, both before and after the amendments introduced by the Finance Act, 2017. The amendments included the creation of a specific tariff item for RBD Palm Stearin under Chapter 1511 and the reclassification of certain items under Chapter 3823. The judgment also referenced the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975, particularly Rule 1 and Rule 3(a), which guide the classification of goods based on specific descriptions.

5. Precedents and Circulars:

The judgment acknowledged that previous CBEC Circulars and Supreme Court judgments, such as the one in Commissioner of Central Excise, Customs & Service Tax, Vishakhapatnam Vs. Jocil Ltd., were based on the entries existing at that time and are not applicable to the current case due to the amendments made by the Finance Act, 2017.

Ruling:

The product 'Refined Bleached Deodorized Palm Stearin' supplied by the applicant is classifiable under Heading 1511 of the Customs Tariff Act, 1975, as per the amended entries and the interpretation rules.