9911796707
TMI Blog2022 (7) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Fact of case The applicant (M/s. Coastal Fats& Oils Private Limited, ozili) is manufacturer of 'spent earth oil'. The solvent extracted spent earth oil is used in the manufacturing of soaps and Poultry feeds. The main input used in manufacturing of spent earth oil is 'spent earth' which is taxable at 18% under the GST Act. The process of manufacture of 'Spent Earth Oil': * 'Spent Earth Oil' is residual vegetable oil recovered from Spent Bleaching Earth (SBE) commonly known as Spent Earth. Spent Earth is a mixture of clay minerals and vegetable oil. It is obtained as a solid waste from the edible oil refining industry. * The clay present in bleaching earth absorbs colour pigments and impurities from edible oil. Thus, spent earth also contains residual oil entrained in it in the range of 30 to 50% by weight. The entrained oil is spread in the form of a thin film spread over the surface area of the clay particles. The entrained oil in SBE is recovered by solvent extraction process using food grade Hexane. The applicant, seeking clarification on the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible grade namely the following Mango Kernel oil, Mahua oil, Rice Bran Oil, Linseed oil and its factions." HS Code 151590: "Other-Tobacco seed oil and its fractions, other oil and their fractions, crude oil." HS Code 15159040: "Other-Technical or industrial uses other than manufacture of foodstuffs for human consumption." * The commodity specified by HSN Code 15159040 also includes JOJOBA Oil which is not edible. Thus, the property of edibleness is not a sine qua non for a commodity to be classified under the HSN Code 15159040. The expression "But not chemically modified other fixes vegetable grade " only excludes certain edible grade vegetable oils from this classification but not the residual vegetable oil recovered by recycling SBE. * As per entry no. 87 of schedule I of Notification No.1/2017-Central Tax (Rate) dated 28/06/2017 and corresponding SGST notification, all vegetable oils, edible or not:, as long as they are not chemically modified are taxable @5% only. The above entry includes the 'residual vegetable oil' recovered by recycling SBE. * In view of the above,, the applicant claims that the residual vegetable oil recovered by recycling SBE by M/s. Coas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading 1516; Inedible Mixtures Or Preparations Of Animal Or Vegetable Fats Or Oils Or Of Fractions Of Different Fats Or Oils Of This Chapter, Not Elsewhere Specified Or Oxidized, Included ? Animal Or Vegetable Fats And Oils And Their Fractions, Boiled, Dehydrated, Sulphurised, Blown, Polymerized By Heat In Vacuum Or In Inedible Inert Gas Mixtures Or Otherwise Or Chemically Modified, Excluding Those Of Heading 1516; Fractions Of Different Preparations Of Animal Or Vegetable Fats Or Oils Or Of Fats Or Oils Of This Chapter, Not Elsewhere Specified Or Included :Other Vegetable Oil And Its Fats Other" Rate of GST: 12% [SI.No.27 of Schedule-II to Notification 28.06.2017 as No.1/2017-C.T.(Rate), dated: amended], but not 5% as claimed by the taxpayer. Thus, Spent Earth Oil merits classification 1518 0039 with GST Rate @ 12% as per SI.No.27 of Schedule-II of Notification No.1/2017-C.T.(Rate), dated:28-06-2017, as amended. 7. Personal Hearing: The authorised representatives of the applicant Sri A.V.S. Krishna Mohan, Advocate & Sri S. Chakra Ramana appeared for Personal Hearing on 21.10.2021 and reiterated the submissions already made in the application. 8. Discussion and Findings: We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8- Animal, vegetable or microbial fats and oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516; inedible mixtures or preparations of animal, vegetable or microbial fats or oils or of fractions of different fats or oils of this Chapter, not elsewhere specified or included. * When we observe the above series of headings, the detailing in the characteristics of the substances make them fall in different categories. In the instant case, the applicant claims that the spent earth oil merits classification under Heading 1515, while the Revenue argues that it deserves to be classified under Heading 1518. To start with, we examine the Heading 1515, whether spent earth oil is covered under 'other fixed vegetable or microbial fats and oils and their fractions'. Generally, Oils which are obtained from one or more plant parts such as root, stem, bark, leaves, flowers, seeds, fruits, and any other part of the plant are called plant oils. Oils obtained from the plant can be broadly classified into two: fixed (vegetable oils) and essential oils. Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... create a more natural form of omega-3 fatty acids that is not only better tolerated with less gastrointestinal side effects but also better absorbed than omega-3 fatty acids in the ethyl ester. Elaidinization is any chemical reaction which convert a cis- olefin to a trans- olefin in unsaturated fatty acids. This is often performed on fats and oils to increase both the melting point and the shelf life without reducing the degree of unsaturation. A detailed examination of the above processes prove that the spent earth oil is out of this category and doesn't undergo either of the above processes as mentioned in heading 1516. * Pursuing it further, we probe into the possibility of classifying it under heading 1517, which deals with 'edible mixture or preparations of animal, vegetable or microbial fats or oils or of fractions of different fats or oils of this chapter' The spent earth oil is neither a mixture of vegetable oils nor a preparation of the oils or fractions of different oils and thus the possibility of falling under the heading 1517 is completely ruled out. * Finally, we scrutinize the heading 1518, which finds place at SI. No 90 of Schedule I at 5 % rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is an inert gas. Hence, the processes indicated above apply to the present case on hand. Coming to the Sl.no 27, the first limb of the entry deals with 'Animal fats and animal oils', which is irrelevant to the case at hand, as it's a vegetable oil. The 2nd Limb of the entry covers, "Inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this chapter, not elsewhere specified of included". The Revenue argues that the second limb is applicable to the present case that spent earth oil is inedible in nature as it's end use is intended for 'soaps and poultry feed'. But, as a matter of fact, the above entry describes 'inedible mixtures or preparation of Vegetable fats or Oils'. Considering the basic characteristics of the spent earth oil, it's merely a vegetble oil extracted from spent earth and it is certainly neither a 'mixture of vegetable oils' nor 'a preparation of vegetable oils'. Even more, it becomes immaterial in the present context, whether it's further qualified by the parameter of being 'inedible' or not. On this premise, we differ with the argument of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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