2020 (6) TMI 447 - AAR - GST

Classification of goods - Rice Bran (22 0il) - rate of tax on supply - HELD THAT - In the instant case, the information provided by the applicant indicates that the product under consideration has not been obtained by milling rice but rather consists of Rice husk of poha and mamra and Sludge/ Wax oil. Thus, the product is clearly not Rice Bran in light of the meaning of Rice Bran. Further, in absence of the actual process undertaken on the raw materials it can only be concluded that product is a combination of Rice husk of poha and mamra and Sludge/ Wax oil. From the scarce information provided in the application, it is understood that the assessee is a chemical or allied industry. Further, the actual processes undertaken and the resultant product have not been accurately specified and as such, the only option available is to classify the said product in the residual entry of Chapter 38 pertaining to miscellaneous chemicals Products - Residual products of the chemical or allied industries, not elsewhere specified or included; Municipal Waste; Sewage Sludge; Other waste specified in Note 6 to this Chapter. The above product can be classified under Chapter 38259000 as the residual entry of the miscellaneous chemical products - Chapter 3825 is covered under Sr. No. 98 of Schedule III of Notn. No. 1/2017 CT (Rate) and attracts rate of 9% CGST and the corresponding State notification specifying the rate of 9% SGST.

Summary

Issues: Classification and Tax Rate Applicability

Classification Issue Analysis:
The applicant, engaged in manufacturing Rice Bran from Rice husk of Poha and Mamra, sought clarification on the tariff heading and tax rate for the product. The Authority noted the absence of detailed information on the manufacturing process. The applicant claimed the final product was Rice Bran, but it was observed that the product did not meet the traditional definition of Rice Bran obtained from milling rice. Instead, it was a combination of Rice husk of Poha and Mamra and Sludge/Wax oil. Consequently, the product was classified under Chapter 38 as miscellaneous chemical products, specifically under sub-heading 38259000, as a residual entry of chemical industries.

Tax Rate Applicability Issue Analysis:
Regarding the tax rate, Chapter 3825, under which the product was classified, attracted a tax rate of 9% CGST and 9% SGST as per Sr. No. 98 of Schedule III of Notification No. 1/2017 CT (Rate). Therefore, the ruling determined that the product, termed Rice Bran (22+oil), fell under Chapter heading 38259000 and was subject to a tax rate of 9% CGST and 9% SGST as per the relevant notifications.

This detailed analysis of the judgment highlights the key issues of classification and tax rate applicability concerning the product Rice Bran (22+oil) manufactured by the applicant. The ruling clarified the classification under Chapter 38 as a miscellaneous chemical product and specified the tax rate applicable under the relevant notifications.