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TMI Blog2021 (11) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced by the petitioner comes in powder form. The petitioner is registered under the Goods and Services Tax (hereinafter referred to the GST) Department, within the jurisdiction of the third respondent and it is an assessee on the file of the officers subordinate and under the administrative control of the third respondent. 1.2. In the manufacturing process, the petitioner would procure fresh fish and it would be carried up in to the steam cooker and steam boiled in the plant. The steam boiled fish then would be sent to the squeezer and the solid part of the fish is transferred into a steam drier where the excessive moisture is removed. Then, the moisture removed material would be conveyed to the pulverizer and the resultant material would be in powder form of fish meal which would be packed in sacks for sale. 1.3. Pursuant to the GST regime with effect from 01.07.2017, the Central Government issued two notifications called Notification No.1 of 2017 Central Tax (Rate) dated 28th June, 2017, in short "Notification No.1/17", and Notification No.2 of 2017, Central Tax (Rate) dated 28th June 2017, in short would be called as "Notification No.2/17". 1.4. In Notification No.1/17, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be noted that, the entries heading, which form part of the said two notifications, are taken out from the list of entries that form part of the Customs Tariff Act, 1975. 1.11. Under Chapter 23 of the Customs Tariff Act, Tariff Item 23.01 as well as 23.09 have been provided with a heading "Residues and waste from the food industries; prepared animal fodder". Tariff item 23.01 consists of various sub-headings like 2301.10, 2301.20 etc. In these sub-headings of Tariff item 23.01, specifically in 2301.20, it is mentioned that 'flours, meals and pellets of fish or of crustaceans, molluscs or other aquatic invertebrates and fish meal unfit for human consumption'. Like that in sub-heading 2301 20 11, it is mentioned as 'in powder form'. 1.12. Like that in Tariff item 2309 under the heading "Preparations of a kind used in animal feeding", in the following sub-heading tariff item ie., 2309 90 31 & 2309 90 32, the items included are "prawn and shrimps feed" and "fish meal in powdered form", respectively. These tariff item entries 2301 & 2309 had been included in Sl.No.102 of Notification No.2/17. Infact, the tariff item 2301 was not originally included, however, by subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2018-GST dated 31.12.2018. 1.19. This circular had been issued by the Board called "Central Board of Indirect Taxes and Customs, New Delhi," probably under the powers that vests in them under Section 168 of the CGST Act, 2017. 1.20. In the said clarification circular, inter alia, one such clarification given is that, the "fish meal" and other raw material used for making cattle / poultry / aquatic feed cannot be said to be exempted within the meaning of Exemption Notification No.2/17 under Sl.No.102. The reasons for such clarification is also explained by the Board in the Circular at para 4.2., which reads thus: "4.2. A number of raw materials such as fish meal falling under heading 2301, meat and bone meal also falling under heading 2301, oil cakes of various oil seeds, bran, sharps, residue of starch and all other goods falling under headings 2302, 2303, 2304, etc, are used to manufacture/formulation of, aquatic feed, animal feed, cattle feed, poultry feed etc. These raw materials/inputs cannot be directly used for feeding animal and cattle. The Larger Bench of the Hon'ble Supreme Court in the Commissioner of Customs (Import), Mumbai v. Dilip Kumar [2018 (361) E.L.T. 577] ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished product, since also being used as a raw material for manufacturing some other food for poultry and animal farm, it can be taken away from the purview of exemption. 2.3. According to the learned Counsel, the reason being, the manufacturing process of the petitioner has been explained, wherein, there could be no doubt to the revenue as the petitioners are getting fresh fish and it would be processed by various methods as has been explained and ultimately, the dried powdered form fish meal would be the finished product. The said fish meal finished product can be directly fed into fish farm or aqua farm as direct meal to them. For the said purpose, the fish meal in powdered form is being sold by the petitioners' industries. But, at the same time, the very same finished product of "fish meal" in powdered form, is also being sold to some other manufacturing units, where they may use this fish meal in powdered form finished product as one of the ingredients or raw material for preparation of further form of poultry feed or animal feed. 2.4. Therefore, pointing out these differences, the leaned Counsel would canvas the point that, merely because the very same finished product c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the law laid down by the Hon'ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar reported in 2018 (361) E.L.T. 577, [in short, "Dilip Kumar case"]. It is pointed out by the learned Counsel that, the Board in para 4.2. of the impugned Circular has categorically stated that, the Supreme Court in Dilip Kumar case has laid down that, inputs for animal feed are different from the animal feed and that would have been the main thrust of the reason on the part of the Revenue to make a dichotomy between the material inputs like fish meals and the finished products, insofar as the fish meal is concerned. 2.9. In this context, learned Counsel pointed out that, in Dilip Kumar case, it was an issue before the constitution Bench of the Hon'ble Supreme Court that, to examine the correctness of the ratio in Sun Export Corporation, Bombay Vs. Collector of Customs, Bombay reported in (1997) 6 SCC 564, namely what is the interpretation rule to be applied while interpreting the tax exemption provision / notification, when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing for the respondents / Revenue, firstly has relied upon the averments made in paragraph Nos.4, 5 & 10 of the counter affidavits filed by the respondents. In order to have a quick reference of those averments heavily relied upon by the learned Standing Counsel, the relevant portions of the counter affidavit are extracted hereunder: "4. It is submitted that the contention of the petitioner that addition of the entry regarding fish meal (under HS 2301) was added in the exemption notification, clearly establishes that fish meal is exempt (as both raw materials and the finished product are exempt) is incorrect. A notification cannot be read in isolation. In the exemption notification along with the HS code, the description of the goods is provided. As can be seen from the description, the exemption is available only to aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed including grass hay and straw supplement and husk of pulses, concentrates and additives, wheat brawn and de-oiled cake. None of the above products are raw materials such as fish meal. 5. It is submitted that the Fish meal is the raw material and is distinct from the feed or additive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prepared animal food is eligible for the said exemption. The fishmeal supplied by the petitioner is not a prepared animal/aquatic/poultry/cattle feed. This was confirmed by Para no. 20 of the affidavit filed by the petitioner that "it is submitted that the petitioner absolutely agrees with the proposition that inputs for animal feed are indeed different from animal feed. This is an admitted position." This being the case, there is no ambiguity with regard to fishmeal supplied as input or raw material to the animal/aquatic/poultry/cattle feed manufacturers not getting covered in the said entry and attracts 2.5% CGST and 2.5% SGST as per the notification issued." 3.1. By relying upon these averments made in the counter affidavit, the learned Standing Counsel would submit that, as per the Exemption Notification, the exemption is available only to aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed including grass, hay and straw supplement and husk of pulses etc. Therefore, none of the above products are raw materials such as fish meal. He further submits that at the same time, the fish meal is the raw material and is distinct from the feed or additives o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 5% can be levied. This is specifically mentioned in Sl.No.103 of Notification No.1/17 dated 28.06.2017. 3.6. Merely because the entry 2301 has subsequently been included in Sl.No.102 of the Exemption Notification No.2/17, it does not automatically provide an exemption to the raw material like fish meal which otherwise covers under entry 2301, which in fact, did not form part of Sl.No.102, at the time of original issuance of Exemption Notification No.2/17. However, subsequently, the said notification underwent an amendment on 22.09.2017, prior to that a Corrigendum Notification dated 27.07.2017 was issued and under both notifications, the entry 2301 though has been saved that would not ipso facto give any leverage to the industries like the petitioners, to seek exemption for the raw material like fish meal. Therefore, the claim made by the petitioners that the petitioners' production of fish meal is an end product and therefore, it is to be exempted, is unacceptable. 3.7. Only in order to clear this doubt, and to have uniformity in implementing the provisions of the Act, such a clarificatory Circular was necessitated and that was issued of course by exercising powers of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in Nil GST category. It may be a food for fish, which includes prawn etc., it may be a fish meal in powdered form. Therefore, one thing becomes clear that, if it is a fish meal in powdered form, that can very well be exempted. If it is a food of fish which means food for prawn etc., which may extend to various other category of animals or sea living creatures for whom also if the feeds of fish are used, that can also be treated as an exempted one. 10. If we come to entry 2301, in sub-heading 2301 20, it says flours, meals and pellets of fish and also it says fish meal unfit for human consumption. In sub-heading 2301 20 11, it further says, in powdered form. Therefore, flours, meals and pellets of fish unfit for human consumption in powdered form, can also be exempted, because it comes under 2301 entry, which also forms part of Sl.No. 102 of Exemption Notification No.2/17. 11. Therefore, it may be either under 2301 or may be under entry 2309. In both way, the fish meal is explicitly provided under exemption category. 12. Only in this context, the Revenue has taken a stand that, if the fish meal is utilised for feeding the fish or aqua including prawn, then it can be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally included only Entry Nos. 2302, 2304, 2305, 2306, 2308 & 2309, subsequently, issued a corrigendum that entry 2302 should be read as 2301 & 2302. Therefore, 2301 also is included. 17. Subsequently, when Amendment Notification No.28/17 dated 22.09.2017 was issued, under Clause (vi) of the notification, the amendment made is that Sl.No.102 for the entries in Column (2), the entries "2301, 2302, 2308 & 2309" shall be substituted. Therefore, the final conclusion which was arrived by the Central Government is that, what are all the items covered under entry 2301, 2302, 2308 & 2309 are to be totally exempted and that is the reason why the amendment notification was issued by exercising its powers under sub-section 1 of section 6 of IGST Act, 2017. 18. On the said notification originally issued ie., Notification No.2/17 under Section 11(1) of the IGST Act, 2017 as well as an Amendment Notification issued under Section 6(1) of CGST Act, 2017, if we take a coherent and conjoint reading, it explicitly makes it clear that the goods covered under four entries namely 2301, 2302, 2308 & 2309 are exempted. 19. If at all anything to be taken away from the purview of such exemption already p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantive right provided to the stake-holders by giving such exemption. Therefore, such kind of exemptions cannot be taken away or done away by issuing clarificatory Circulars by the Board, in exercise of its powers under Section 168 of the CGST Act, 2017. 23. Therefore, for the said reason also, this Court feels that the impugned clarificatory Circular cannot override the exemption provided under the notifications referred to above. 24. Though the judgment in Sun Export Corporation case and Dilip Kumar case have been relied upon by both sides, the said judgment can be taken as an aid only for the limited purpose to know what has been stated in the said judgment with regard to the present issue. 25. However, when we look at the decision in Sun Export Corporation case, the law propounded by the Hon'ble Supreme Court is that, if there is any ambiguity in the notification like exemption notification, such benefit arising out of ambiguity be conferred on the assessee. However, the said law laid down in Sun Export Corporation case has been negated and overruled by the Constitution Bench in Dilip Kumar case, referred to above, where the Hon'ble Supreme Court ultimately has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Council, in exercise of the powers under sub-section (1) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), - (i) no central tax shall be levied or collected in respect of supply of fishmeal (falling under heading 2301), during the period commencing from the 1st day of July, 2017 and ending with the 30th day of September, 2019 (both days inclusive); (ii) central tax at the rate of six percent, shall be levied or collected in respect of supply of pulley, wheels and other parts (falling under heading 8483) and used as parts of agricultural machinery (falling under headings 8432, 8433 and 8436), during the period commencing from the 1st day of July, 2017 and ending with the 31st day of December, 2018 (both days inclusive). (2) No refund shall be made of all such tax which has been collected, but which would not have been so collected, had sub-section (1) been in force at all material times." 29. Though only for a particular period such exemption has been provided under the aforesaid provision of the Finance Act, 2020, this has been quoted by the learned Counsel for the petitioners to substantiate the very intention of the Legislature that, such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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