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TMI Blog2022 (2) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... items pertaining to this entry do not fit in the frame as by-product or residue whatever name it called of brewery, generated during the process of manufacturing of alcohol - As per meaning provided in Wikipedia, the Brewing is the production of beer by steeping a starch source (commonly cereal grains, the most popular of which is barley/wheat) in water and fermenting the resulting sweet liquid with yeast. In the instant case, it is fact that in the process of manufacturing of alcohol, the 'starch portion' present in the wheat grain is utilized through distillation process. Means 'starch present in the wheat grain' is being processed in brewery. Hence, main key element i.e. 'starch' is present here. Further, the applicant company is a kind of brewery where brewing or distilling process are being undertaken. In the result of manufacturing process of alcohol, several residues, dregs and waste are come into picture - As far as nature of DWGS (Distillers Wet Grain Solubles) is concern, it is nothing but brewing or distilling dregs and waste as it is come out in the picture as a result of brewing or distilling process. DWGS (Distillers Wet Grain Solubles) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials. During distillation process, only the starch portion present in the Grain is utilized in production of the alcohol, which is the main product, and the other components viz. protein, fibre and oil are not utilized in the production of alcohol. Another by-product is obtained by further extraction, processing and conversion into Wet Cake, which is Cattle Feed/ Poultry Feed. It is imperative to put on record that no other use of wet cake other cattle feed is possible hence, cattle feed is a by-product in the process of manufacture of alcohol and cannot be termed as 'residue'. (a) The terms 'by-product' and 'residue' have been defined, explained and understood as per industry norms and have been consistently followed by the industry and the Applicant Company alike. By-product: In CIMA Terminology, By-product is a product which is recovered incidentally from the material used in the manufacture of recognized main products such as having either a net realizable value or a usable value which is relatively low in comparison with the saleable value of the main products. By products may further be processed to increase their realizable value. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of water (Spent Wash), which is reused/ recycled into the distillery/ alcohol manufacturing process after treatment. Presently, Spent Wash is not allowed to be sold as such due to prevailing government guidelines. The Applicant Company is not selling the Spent Wash and hence there is no sale of residue by the Applicant. ........................ ........................ , it is clear that distilleries get Alcohol (ENA) after the distillation process as well as Wet Distillers Grain, i.e., Cattle Feed, i.e., the by-product. During distillation process, only the starch portion present in the Grain is utilized in production of the alcohol and the remaining components viz. protein, fiber and oil are not utilized in the production of alcohol. These become basic raw material for production of cattle feed. What remains after Distillation process is - Whole Stillage (WS) Distillery Effluent / Spent Wash/Whole Stillage is the residue/waste after production of Alcohol during distillation process. Spent wash is not marketable and can be sold as such. DWGS (Distillers Wet Grains Soluble): (also popularly known as Wet Cake in Distillery Industry):- DWGS (Dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form of pellets. SGST @ 2.5% CGST @2.5% 5.00% 2 2309 Aquatic feed including shrimp feed and prawn feed, poultry feed cattle feed, including grass, hay straw, supplement husk of pulses, concentrates additives, wheat bran deoiled cake other than rice bran. Nil Nil Whether DWGS is dregs and waste of distillery? DWGS or Wet Cake is produced in a significant quantity in the manufacturing process and has its own market value and cannot be considered as mere residue or waste. It is apparent that to produce DWGS, the applicant has made huge capital investment in Centrifuge Decanters as explained in para 6 above. The end use of DWGS is only for the purpose of Cattle Feed. It has no other use. Further, due to following reasons the DDWS should be classified under entry 2309 i.e., Cattle Feed: - Spent Wash or Distillery dreg is having high Biochemical Oxygen Demand (BOD), Chemical Oxygen Demand (COD), Acidity and containing hazardous contents, it is neither marketable nor usable as cattle feed. Alcohol distillation ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsignificant value, volume and usage. Here our by-product DWGS is having a significant value, volume and usage as cattle feed. The input -output ratio is also significant. For Example, Cost of Grain is ₹ 17.50/kg than value of Cattle feed (wet) is ₹ 3.5/kg = 20 %; 1 Kg of grain produces apx. 450 ML of Alcohol 1.8 Kg of Cattle Feed which is having a significant volume value. So, in any case or in any comparison Wet Cake or DWGS should not be taxable under HSN Code 2303 as distiller's dregs as it is categorically classified as poultry feed cattle feed under HSN Code 2309 as per the notification dated 31st December 2018. Cattle Feed as Defined by Hon'ble Supreme Court of India: The Cattle Feed explained by the Supreme Court in the case of Commissioner of Sales Tax Vs. Ram Chander Asha Ram reporter as 123 STC 415, that in the generic sense the expression Cattle Feed was inclusive of everything which is fit for consumption for cattle. TRADE PARLANCE (Commercially known name)/Settled Law Cases ,- a. While interpreting the fiscal statute, it is a settled law of the land that the language used in the statute must be interpreted as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted so that each has a separate effect and neither is redundant or nullified. g. As per case of Rhino Machines Pvt. Ltd. v/s CCE, Vadodara-2005 (181) ELT 63 (T), goods have to be assessed in the form in which they are cleared from the factory. h. As per case of Share Medical Care v/s U01-2007(209) ELT 321 (SC), if the applicant is entitled to benefit under two different Notifications or under two different heads, he can claim more benefit and it is duty of authorities to grant such benefits if applicant is entitled to such benefit. i. As per the case of HCL ltd. v/s Collector of Customs, New Delhi-2001 (130) ELT 405 (SC), when pluralities of exemptions are available, the assessee has the option to choose any of the exemptions, even if the exemption so chosen is generic and not specific. j. Further, Circular No. 80/54 /2018 -GST Dated 31/3/2018 clearly states that Heading 2309 would cover items like feed supplements for animals that contain vitamins and other ingredients such as cereals and proteins. These are covered in chapter 23 under heading code 2309. B. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT:- A. Whether in the facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gasse and other waste of sugar manufacture, brewing or distilling dregs and waste, whether or not in the form of pellets 2.5% CGST rates on goods as per [Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017, as amended from time to time]:- S.No. Sub-heading /Chapter / Heading/ Tariff item Description of Goods Rate 1 2 3 4 102 2301,2302, 2308,2309 Aquatic feed including shrimp feed and prawn feed, poultry feed cattle feed, including grass, hay straw, supplement husk of pulses, concentrates additives, wheat bran de-oiled cake [other than rice bran] NIL 5. Let us analysis the present case in the light of above legal provisions keeping in mind the facts and documents/information submitted by the applicant in this regard. 6. The case laws cited by the applicant are not applicable in this case as the facts are different from the present case. 7. On gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess are being undertaken. In the result of manufacturing process of alcohol, several residues, dregs and waste are come into picture. 12. As far as nature of DWGS (Distillers Wet Grain Solubles) is concern, it is nothing but brewing or distilling dregs and waste as it is come out in the picture as a result of brewing or distilling process. 13. As per the Explanatory Notes to the HSN, heading 2303 includes residues of starch manufacture and similar residues (from maize (corn), rice, potatoes, etc.); beetpulp; bagasse; other waste products of sugar manufacture; brewing or distilling dregs and waste, which comprises in particular - dregs of cereals obtained in the manufacture of beer and consisting of exhausted grains remaining after the wort has been drawn off; malts sprouts separated from the malted grain during the kilning process; spent hops; Dregs resulting from the distillation of spirits from grain, seeds, potatoes, etc; beet pulp wash (residues from the distillation of beet molasses).All these products remain classified in the heading whether presented in wet or dry. 14. In view of above, we find that DWGS (Distillers Wet Grain Solubles) is an inevitable outcome in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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