2020 (8) TMI 102 - AAR - GST

Classification of goods - HSN Code - rate of tax - poultry meal - poultry fat - whether classfiable under HSN Code 2309 9020 or under HSN code of 1501 9000? - N/N. 01/2017-CT (Rate) dated 28.06.2017 02/2017-CT (Rate) dated 28.06.2017 - HELD THAT - The supply of animal feed, poultry feed and cattle feed including grass, hay straw, supplement husk of pulses, concentrates additives, wheat bran de-oiled cake are covered under the said entry. The aforesaid entry covers different types of products which are basically in the nature of feeds.This entry does not apply to raw material/inputs like fish meals or meat cum bone meal (MBM) falling under heading 2301 - the product manufactured by the applicant is not a feed but raw materials for feed and therefore the same are not covered under the domain of the above entry. Consequently we hold that the product manufactured by the applicant is not exempted from tax as opined by the applicant. This view is fortified by the CBIC Circular bearing No. 80/54/2018-GST, dated 31-12-2018. The disputed product (classifiable under chapter sub-heading number 2301.10.90) attracts GST rate of 5% (2.5 % CGST 2.5% SGST) under sl. No. 103 of the Schedule-1 of the Not. No. 01/2017-CT (R), dated 28.06.2017 (as amended). Poultry fat - HELD THAT - The said product emanates as a by-product during the process of chicken remnants for manufacture of the primary product viz., poultry meal . It is noticed that Schedule to the Customs Tariff has two entries covering the said product - Tariff Heading No. 0209 covers poultry fat not rendered/otherwise extracted and Tariff Heading No. 1501 covers poultry fat other than that of Tariff Heading No. 0209. In the case on hand, the applicant submitted that the poultry fat supplied by them is extracted as a by-product during the process of their main product poultry meal . As such we opine that the product poultry fat supplied by the applicant merits to be classified under Tariff item No. 1501 90 00. The product poultry meal manufactured and supplied by the applicant attracts GST rate of 5% in terms of Not. No. 01/2017-CT (R) dated 28.06.2017 (as amended).

Summary

Issues Involved:
1. HSN Code and rate of tax for the supply of 'poultry meal'.
2. HSN Code and rate of tax for the supply of 'poultry fat'.

Issue-wise Detailed Analysis:

1. HSN Code and Rate of Tax for 'Poultry Meal':

The applicant, M/s. Sushi Pet Nutrisciences, sought an advance ruling on the classification and tax rate applicable to 'poultry meal'. They initially classified 'poultry meal' under HSN Code 2309 9020, claiming it as a concentrate for animal feed, attracting a 'nil' rate of tax.

Upon review, the Authority noted that 'poultry meal' is manufactured from chicken waste (legs, heads, intestines, feathers, etc.) through a process involving cooking, drying, and powdering. The final product is used as a raw material in animal feed production. The Authority referred to Chapter Note 23 of the Customs Tariff Act, 1975, which includes products used in animal feeding that have lost the essential characteristics of the original material.

The Authority concluded that 'poultry meal' is not a finished animal feed but a raw material for it. Consequently, it cannot be classified under Chapter Heading No. 2309. Instead, it falls under Chapter Heading No. 2301, specifically sub-heading 2301 10 90, which covers "Flours, meals, and pellets, of meat or meat offal; greaves."

The Authority also referred to Exemption Notification No. 2/2017-CT (Rate) dated 28.06.2017, which exempts certain feeds under Chapter Heading Nos. 2301, 2302, 2308, and 2309. However, since 'poultry meal' is not a finished feed but a raw material, it is not exempted. It attracts a GST rate of 5% (2.5% CGST + 2.5% SGST) under Sl. No. 103 of Schedule-1 of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).

2. HSN Code and Rate of Tax for 'Poultry Fat':

The applicant classified 'poultry fat' under HSN Code 1501 9000, attracting a 12% tax rate (6% CGST + 6% SGST/UTGST). The Authority reviewed the classification and noted that 'poultry fat' is a by-product obtained during the processing of chicken remnants for 'poultry meal'.

The Customs Tariff Schedule has two relevant entries for 'poultry fat': Tariff Heading No. 0209 (covering poultry fat not rendered or otherwise extracted) and Tariff Heading No. 1501 (covering poultry fat other than that of Heading No. 0209). Since the applicant's 'poultry fat' is extracted as a by-product, it falls under Tariff item No. 1501 90 00.

The Authority confirmed that 'poultry fat' attracts a 12% GST rate (6% CGST + 6% SGST/UTGST) as per entry No. 19 of Schedule-II of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).

Advance Ruling:

1. The product 'poultry meal' is classifiable under Chapter Sub-Heading No. 2301 10 90 of the first schedule to the Customs Tariff Act, 1975, and attracts a GST rate of 5% (2.5% CGST + 2.5% SGST) under Sl. No. 103 of Schedule-1 of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).

2. The product 'poultry fat' is classifiable under Chapter Sub-Heading No. 1501 90 00 of the first schedule to the Customs Tariff Act, 1975, and attracts a 12% GST rate (6% CGST + 6% SGST/UTGST) as per entry No. 19 of Schedule-II of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).