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TMI Blog2021 (12) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... ter referred to in sub-Section (2) of Section 97 for advance ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-Section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. Subject: GST - Appeal filed by M/s. Sushi Pet Nutri science, Secunderabad under Section 100 (1) of TGST Act, 2017 against Advance Ruling TSAAR Order No.04/2020 dated 24.6.2020 passed by the Telangana State Authority for Advance Ruling - Order-in-Appeal passed - Regarding. 1. The subject appeal has been filed under Section 100 (1) of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y meal and poultry fat is chicken wastages such as chicken legs, chicken head, intestine, feathers, skin etc. which is bought from the chicken stall owners in twin cities and other parts of Telangana State. The manufacturing process was detailed as follows:- (i) The poultry offal is dumped in to the batch cookers through screw conveyer, Cooker operator cook for 30 minutes and dry the resulting for 4 hours in same cooker, then the resulting material is put in storage bins which is in to semi-finished stage. (ii) The semi-finished product contains a high level of fat which will be separated by using a fat press/screw press. Poultry meal coming from screw press will be sent to the hammer mill for making size reductions and then it is passed through a sieve. (iii) The supplement is sent to a blender where anti-oxidants are added to prevent the supplement from oxidation. The supplement is then packed in HDPE bags and stored for sale. Final product is in brown color. The product contains Minerals, proteins and amino acids and is used as one of the raw ingredients by animal/aqua feed manufacturers. It is not fit for human consumption. (iv) The fat oil collected in above process is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c substances, whether or not containing additives for oral feeding in the form of complete feed. Concentrates provide essential extra energy and protein. In the product of poultry meal which is a concentrate contains proteins, some fat, minerals and amino acids. The animal feed manufacturers use the product as per their standard formula in their manufacturing process of compound animal feed so that the feed will become whole some or complete feed which will help improve the health of the animal. They also referred to the definition of Concentrate feeds, as PER FAO (Food and agriculture Organization) as under: Feeds may be broadly classified as concentrate and roughages, depending on their composition. Concentrate are feeds that contain high density of nutrients, usually low in crude fiber content (less than 18% of dry matter) and high in total digestible nutrients. Roughages are feeds with low density of nutrients with crude fiber content over 18% of dry matter including most fresh and dried for ages and fodders. Concentrates maybe high in energy referred to as energy concentrates such as cereals and milling by products, or high in protein, with over 20% crude protein referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at poultry meals are not directly used as feed to animals is erroneous and without consideration of basic aspects of animal feeding. (iv) Even otherwise, the observation of the AAR that poultry meal is not directly fed to the animals and therefore, is not covered within the language of the Heading of Chapter 23 is erroneous. The Heading of Chapter 23 nowhere states that the preparations/products of a kind must itself be directly fed to animals. On the contrary, it states that the products may be "used' in animal feeding. The expression is wider and would encompass concentrates such as poultry meal which may be used in whichever form for the purpose of animal feeding. (v) The AAR has selectively interpreted the fact that the poultry meal is used as raw material for manufacture of animal feed against the appellant without considering the fundamental nature of poultry meal. Although poultry meal is applied as an ingredient in further manufacture of animal feed, that does not imply that poultry meal itself is not animal feed or concentrate for compound animal feed. The AAR could not appreciate the basic aspect that, like humans, animals need a balance of nutrients, protein and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 577) as if a ratio was laid down that inputs for animal feed are different from animal feed. The reliance placed is misconceived and misleading. The decision in Dilip Kumar was rendered by a Constitution Bench of Hon'ble Supreme Court with the limited purpose of answering a specific reference as to whether the ambiguity arising out of an exemption notification issued by the Government as against a Legislative Provision should be settled in favour of an assessee or not. The Hon'ble Supreme Court merely dealt with this legal principle, but did not render or approve any finding or any principle relating to the classification of animal feed or inputs on merits. The extract referred to be the AAR is misunderstood since the facts arising from the case, which gave rise to the reference, were merely recorded by the Five Judge Bench and no finding or determination was rendered by the Five Judge Bench. (ix) The AAR erred in brushing aside the decision relied upon by the appellant in case of M/s. Supreme Suguna Foods Company Limited (2015 316 ELT 341 Tri. Chennai). The Tribunal had found that high protein poultry mash is classifiable as a preparation of a kind used in animal feeding. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Tariff). Though the said decision has been cited and relied by them, the Advance Ruling Authority has not considered or addressed the same; nor stated why it is not applicable or how it is distinguishable. To his knowledge, the said decision of Hon'ble Tribunal has not been appealed by Revenue. The classification ordered by Advance Ruling Authority is exactly opposite to the Hon'ble Tribunal's judgment. 5.2. He also referred to Note 1 to Chapter 23 of the Customs Tariff which read as; "Heading 23.09 includes products of a kind used in animal feeding, no elsewhere specified or included, obtained by processing vegetable or animal materials to such on extent that they have lost the essential characteristics of the original material, other than vegetable waste, vegetables residues and by-products of such processing". The product manufactured by them is form the process specified above and the essential characteristics of original waste material is lost totally, the product is in powder form and in the form of concentrate which has to be mixed with starch and other feed items etc. For feeding to the animal. He submitted that Heading 2309 9020 covers concentrates for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for compound animal feed as contended by the appellant. * secondly whether the said product is eligible for exemption in terms of entry SI.No. 102 Of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017 (as amended), as claimed by the appellant or same is not eligible for the said exemption and hence chargeable to 5% GST as held by the lower authority in the impugned order. 8. For determining relevant entries in the First Schedule to the Customs Tariff Act, 1975 ("Customs Tariff" in short) merit a reference, since in terms of explanation (iii) and (iv) to Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017, the classification of goods has to be done as per the Chapters, Headings, sub-headings and tariff item number of the Customs Tariff and also applying the rules for interpretation of the Schedule including the Section and chapter Notes and the General Explanatory Notes. 9.1 The relevant entries under Heading 2301 and 2309 of the customs tariff read as follows:- Heading 2301: Tariff Item Description of goods 2301 Flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to principles of rule 3. 3. When by application of rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or mode up of different components, and goods put up in sets for retail sale, which cannot he classified by reference to (a). shall he classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above tariff entries, interpretative Rules and Explanatory Notes it appears that the goods in question meet the description of the goods "poultry Meal" falling under Tariff item 2301 covering "meals of meat or meat offal". The process of manufacture described by the appellant is similar, rather identical to the process described in the HSN explanatory notes under heading 2301. 10.2 With regard to the appellants claim for classifying the impugned goods as concentrates falling under Heading 2309 of the Custom Tariff, we find the same is legally untenable due to the following reasoning. 10.3 In order to fall under Heading 2309, the goods should be "preparations of a kind used in animal feeding". Considering the said specific phrase used as the terms of the heading and also considering the said various types of goods mentioned thereunder i.e. Dog or cat food in retail form, compound animal feed fish, prawn feed etc.. And also taking into account the HSN explanatory Notes for the heading 2309 supra, it is evident that the said heading is applicable to finished products which are as such fed to the animals. To further elaborate, the Heading contains the wording as "..used in anima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce including technical literature etc. To show and establish that the poultry meal fulfills the above criteria so as to qualify as 'concentrates'. Hence we find the appellants claims to be unsubstantiated and therefore not acceptable. 10.6. It is further observed that in terms of the Chapter Note to Ch. 23 in the Customs Tariff, as referred supra, the products under heading 2309 includes those which are processed to such an extent that the essential characteristics of the original material is lost. The HSN Notes elaborate on this aspect showing that the extent of processing should be that the characteristics cellular structure of the original vegetable material is no longer recognizable under a microscope. The appellants have laid much emphasis that the process of manufacture of poultry meal is the same as mentioned in the Chapter note, whereby the characteristics of the chicken legs, intestines etc., are lost and a totally new product emerges in the powder form. As per the description of manufacturing process given by the appellants, the poultry meal emerges from sequence of cooking, separation of fat, pressing and sieving: which are plain physical processes whereby it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .01 covers the residues and wastes arises during the process of manufacture of final product from food industry The clearance of residues und wastes above would he Nil rate of duty under Heading No. 23.01. The other Heading No. 23 02 covers preparation of a kind used in animal feeding There is no dispute that heading 23 02 of CETA corresponds to Heading No. 23 09 of CTA. ... 11.3 Thus, in the above case law, the Heading 2301 of Central Excise Tariff which was considered by the Hon'ble Tribunal covered "Residues and waste from food industries, including bagasse, other waste of sugar manufacture and oil cakes''. The same is not at all comparable with the situation in the instant case wherein the Heading 2301 of Customs Tariff covers "Flours, meals and pellets.....of meat and meat offal...". Hence, the above case law is clearly distinguishable on the facts and context of statutory text / classification entries involved, whereby it cannot be said to be a binding precedent to be applied to the present case. Accordingly, we find the appellant's arguments in this regard to be legally not tenable. 12. Further, in terms of Rule 1 of the Interpretative Rules, the "terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready examined the said claim and negated the same vide our findings and discussion, supra. The same holds good and applies in this context also. 15.4 The appellant has also put forth other contentions in this regard i.e. the lower authority has referred to the Hon'ble Supreme Court judgment in the case of Dilip Kumar & Company, which is not at all applicable nor relevant; the lower authority erred in relying upon a TRU-Circular which does not have statutory backing etc. We find that these contentions do not have any bearing vis-a-vis the issue of eligibility to an exemption Notification. Even otherwise, we find that the reference to the Hon'ble Supreme Court judgment in Dilip Kumar & Co., finds mention in the TRU Circular dated 31.12.2018. It has been further held in a catena of judgments that TRU Circulars however have persuasive value and aid in interpreting the scope / text of Notification-entries etc. being contemporaneous exponentio. Reliance in this regard is placed on Shahnaz Ayurvedics vs Commissioner of Central Excise, Noida 2004 (173) ELT. 337 (All.). -which was upheld by the Hon'ble Supreme Court -, wherein the Hon'ble Allahabad High Court has inter a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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