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2022 (1) TMI 149 - AAR - GSTClassification of goods - Soya husk resulting from the extraction of Soyabean Oil - exemption from payment of GST as Poultry feed and Cattle feed under HSN heading 2302 under Entry 102 of Notification No.2/17-Central Tax (Rate) dated 28.06.2017 - principal input/ ingredient for manufacture or processing of Cattle feed and Poultry feed which may become value added product in the market - HELD THAT - The applicant is selling only soya husk resulting from extraction of Soyabean oil to the manufacturers / processors of Cattle feed and Poultry feed. As per the interpretation of the applicant under Rule 3(a) specific entry will prevail over the general entry in case where the goods are covered under more than one entry. Exemption Entry 102 is general entry exempting GST on supply of prepared Poultry feed and Cattle feed under Chapter 2302. - Entry 105 of Schedule I is a specific entry prescribing GST @5% on solid residues whether or not ground or in the form of pellets resulting from the extraction of soyabean oil under Chapter 2304. Soya husk resulting from the extraction of Soyabean oil being principal input/ ingredient for manufacture or processing of Cattle feed and Poultry feed which may become value added product in the market. Soya husk being principal input/ ingredient to Poultry feed and Cattle feed industry which is taxable @ 5% under Subheading 2304 as per Entry 105 of Notification No.1/17-Central Tax (Rate) dated 28.06.2017.
Issues Involved:
1. Classification of Soya Husk resulting from the extraction of Soyabean Oil. 2. Applicability of GST exemption under HSN heading 2302. 3. Determination of correct tariff and rate of tax for Soya Husk under GST. Detailed Analysis: Issue 1: Classification of Soya Husk resulting from the extraction of Soyabean Oil The applicant, M/s Adani Wilmar Limited, engaged in the manufacturing and sale of Soya Oil, sought clarification on the classification of Soya Husk, a by-product obtained during the extraction process. The primary question was whether Soya Husk should be classified under HSN heading 2302 (which exempts it from GST) or under HSN heading 2304 (which attracts 5% GST). Issue 2: Applicability of GST exemption under HSN heading 2302 The applicant contended that Soya Husk could be classified under HSN heading 2302, which includes “Bran, sharps, and other residues, whether or not in the form of pellets, derived from the sifting, milling, or other working of cereals or of leguminous plants.” This classification would exempt Soya Husk from GST under Entry 102 of Notification No.2/17-Central Tax (Rate) dated 28.06.2017. However, the ruling clarified that as per Circular No.80/54/2018-GST dated 31st December 2018 and the Supreme Court's decision in the Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar (2018-361-E.L.T-577), raw materials/inputs like Soya Husk used in the manufacture of animal feed do not qualify for exemption under Entry 102. Instead, the exemption applies only to the prepared animal feed itself. Issue 3: Determination of correct tariff and rate of tax for Soya Husk under GST The ruling emphasized that Soya Husk should be classified under HSN heading 2304, which covers “Oil cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extraction of soyabean oil.” This classification attracts a GST rate of 5% as per Entry 105 of Notification No.1/17-Central Tax (Rate) dated 28.06.2017. The ruling also referred to the Rules of interpretation of HSN code, stating that the specific entry (HSN 2304) prevails over the general entry (HSN 2302) for classification purposes. Therefore, Soya Husk, being a solid residue from the extraction of soyabean oil, falls under HSN 2304 and is subject to 5% GST. Ruling: 1. Soya Husk resulting from the extraction of Soyabean oil is taxable at 5% under Subheading 2304 as per Entry 105 of Notification No.1/17-Central Tax (Rate) dated 28.06.2017. 2. The ruling confirms that Soya Husk will be covered by specific entry 105 of Schedule I, attracting GST at 5% (2.5% CGST & 2.5% SGST) under Chapter 2304. 3. The ruling is valid subject to the provisions under section 103(2) until and unless declared void under section 104(1) of the GST Act.
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