2020 (12) TMI 796 - AAR - GST

Classification of goods - rate of GST - Tyre Pyrolysis Oil - Applicant has submitted that pyrolysis oil should be qualified as either a Biodiesel (HSN 3826) as it is derived from rubber part of the Tyre which is renewable in nature just like Palm Oil made from Palm fruit used to make biodiesel or as a Marine Fuel (HSN 2710) as its specifications meet that of Marine fuels - HELD THAT - The Applicant is engaged in recycling of the waste tyres used by vehicles and pyrolysis oil is recovered during the said process of recycle, along with other products like Iron and Steel and carbon black. It is only the rubber component of the tyre which is converted into Pyrolysis Oil, which can be used for heating purposes and as a liquid fuel. Applicant has submitted that Pyrolysis oil can also be sold as a liquid fuel - Since there is no specific and separate schedule entry prescribed for Tyre pyrolysis oil , we are required to classify the said product. The Applicant vide email dated 20.11.2020, has made submissions which appear to have been sourced from the internet. However they have not made any submissions in respect of the chemical composition of their product nor have submitted any test report which shows the composition of their product - In view of non-submission of details, this Authority cannot pass a Ruling on the questions raised by the Applicant. The said question cannot be answered in view of non-submission of full details by the Applicant as mentioned under the Observations and Findings section of the order.

Summary

Issues: Classification of Tyre Pyrolysis Oil and Applicable Tax Rate

Analysis:
1. Facts and Contention - Applicant's Submission:
- The applicant, a recycling company, sought clarification on the classification and tax rate of Tyre Pyrolysis Oil, a product derived from waste tyres through a recycling process.
- They argued that the oil should be classified as either Biodiesel (HSN 3826) or Marine Fuel (HSN 2710) due to its renewable nature and specifications resembling marine fuels.

2. Contention - Jurisdictional Officer's Submission:
- The officer presented a table showing various products and their corresponding tariff codes, highlighting that Pyrolysis oil is used as an industrial fuel to substitute furnace oil or industrial diesel.
- It was argued that Pyrolysis oil, made from inorganic sources, cannot be considered as Biodiesel due to the absence of chemical reaction with lipids like in traditional Biodiesel production.

3. Observations and Findings:
- The Authority noted that the applicant recycles waste tyres to produce Pyrolysis Oil along with other byproducts.
- Due to the absence of a specific entry for Tyre Pyrolysis Oil, the Authority was tasked with classifying the product based on its characteristics.
- The applicant failed to provide the necessary details regarding the composition of the product during the hearing, hindering the Authority's ability to make an accurate classification.
- Despite requests for composition details and test reports, the applicant did not provide sufficient information for a conclusive ruling.

4. Conclusion:
- The Authority, due to the lack of essential details from the applicant, could not provide a definitive classification or tax rate for Tyre Pyrolysis Oil.
- The order dated 15.12.2020 stated that the question regarding the classification and tax rate of the oil could not be answered due to insufficient information provided by the applicant.

This detailed analysis of the judgment highlights the key arguments presented by both the applicant and the jurisdictional officer, the observations made by the Authority, and the ultimate conclusion reached in the absence of crucial details necessary for a ruling on the classification and tax rate of Tyre Pyrolysis Oil.