2020 (4) TMI 870 - AAR - GST

Classification of goods - rate of tax - sale of Poha Bran or Avalakki Bran or Bran of beaten rice which supplied to cattle feed manufacturing units - Taxability - HELD THAT - The said poha bran is nothing but rice bran and is by product of Poha or Avalakki manufacturing process from paddy. Both rice bran and poha bran are derived from Paddy and the constituents of both are same. They are given different commercial narnes due to the different process of manufacture which give rise to them. Both are used as ingredient for manufacturing of cattle feed. The composition of the poha bran contains oil to the extent of 3 to 4 % and fibre to the extent of 35%. Hence poha bran is nothing but Rice bran - As for as classification of Poha bran is concerned the said goods can be classified under HSN chapter /heading vide HSN 2302 40 00. The present classification applied by the applicant for Poha bran under HSN 2304 00 90 is incorrect as it is applicable to those from soyabean. Taxability - HELD THAT - The poha bran, which is same as Rice bran is covered under entry no. 103B of Schedule I of Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 6/2018 - Central Tax (Rate) dated 25.01.2018 and the same is liable to tax at 2.5% from 25.01.2018 under the CGST Act. Similarly the same is also liable to tax at 2.5% under the KGST Act, 2017 from 25.01.2018.

Summary

Issues:
Rate of tax on sale of Poha Bran supplied to cattle feed manufacturing units.

Analysis:
The applicant, a private firm registered under the Goods and Services Act, sought an advance ruling on the tax rate applicable to the sale of Poha Bran supplied to cattle feed manufacturing units. The applicant provided details stating that Poha Bran is a by-product obtained during the manufacturing process of Poha or Avalakki, used as an ingredient in cattle feed manufacturing units. The composition of Poha Bran includes 3-4% oil and 35% fiber, making it suitable for use in cattle feed.

During the personal hearing, the applicant reiterated the facts mentioned in the application, emphasizing the process of making Poha Bran from soaking paddy in water, followed by roasting and hulling processes. The applicant highlighted the confusion regarding the classification and tax rate applicable to Poha Bran, seeking clarification on the correct classification and tax treatment of the product.

In the findings and discussion, it was established that Poha Bran is essentially Rice Bran, derived from the same raw material as Rice Bran, with similar constituents. The authorities clarified that the correct classification for Poha Bran is under HSN 2302 40 90, as opposed to the applicant's classification under HSN 2304 00 90. It was further determined that Poha Bran falls under entry no. 103B of Schedule I of Notification No. 1/2017 - Central Tax (Rate), attracting a tax rate of 2.5% under both the CGST Act and the KGST Act from 25.01.2018.

In conclusion, the ruling declared that Poha Bran is classified under HSN 2302 40 90 and is subject to a tax rate of 2.5% each under the CGST and SGST Act, providing clarity on the correct classification and applicable tax rate for the product supplied to cattle feed manufacturing units.