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TMI Blog2022 (7) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... miscella') is treated in a vacuum distillation process. The hexane evaporated during the distillation is condensed and separated from water in a decanter. The recovered hexane is then reused in the extractor. Sl.no 90 is examined in light of the solvent extraction method. The processes adopted as per the entry are boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified. In the instant case, Spent Earth Oil is obtained/ extracted by or blown by heat at certain temperatures, in the presence of food grade solvent Hexane, 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur 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 tax of 'solvent extracted spent earth oil', had filed an application in form GST ARA-01 dated 19.07.2021 by paying required amount of fee. 4. Questions raised before the authority: What is the Rate of Tax on solvent Extracted spent Earth oil? On Verification of basic information of the applicant, it is observed that the applicant is under State jurisdiction, i.e. Assistant Commissioner (ST) Gudur Circle Nellore Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Centre Tax authorities to offer their remarks as per Sec. 98(1) of CGST /APGST Act 2017. Remarks were received from the Superintendent of Central Tax, Nellore CGST Range-4, stating that spent earth oil merits classification under HSN 1518 0039 on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling 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. Coastal Fats Oils Private Limited, is classifiable under the HSN Code 15159040 and the applicable rate of tax under the GST Act 2017 is 5%. 6. Remarks from Revenue: The taxpayer is the manufacturer and supplier of Spent Earth Oil for which the input is Spent Bleaching Earth/Spent Earth . Spent Earth is a mixture of clay minerals and vegetable oil which is a waste emerged out of edible oil industry. Spent Earth is a solid waste material that is generated as part of the bleaching aspect of the Physical Refining process in the Vegetable Oil Industry. This Bleaching is done solely to reduce the color of the Oil. The naturally occurring Bleaching Earths such as Bentonite or Montmorillonite is used to increase the absorpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 have examined the issues raised in the application. The taxability of the goods supplied or to be supplied, as governed under the provisions of respective GST Acts are examined to decide the question involved in the present Ruling. As seen from the application, the applicant is engaged in the recovery of vegetable oil from spent bleaching earth through extraction process. Before we delve into the classification and taxability of the product, Spent Earth Oil, we look into the general process of refining that involves in the vegetable oil refining industries. Vegetable Oils undergo numerous refining steps in order to remove undesirable compounds and produce high quality, sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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. Fixed oils or vegetable oils: Oils that are derived from seeds, nuts, and vegetables are fixed oils. Fixed oils are also called vegetable oils. They are obtained from the oil seeds. Fixed or vegetable oils are esters of fatty acids, dense and non-volatile. Example of vegetable oils is olive oil, almond oil, coconut oil, sunflower oil. Vegetable oils are used for various purposes. They are used as edible oil for cooking, as industrial raw materials, and feedstock for producing many useful products. The term fixed oils are frequently interchangeable with vegetable oils. Essential oils: Oils that are obtained from pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 % rate and SI.No. 27 of Schedule II at 12% of notification No. 01/2017 Central Tax (Rate) Dt.28.06.2017 as presented below. S.No Chapter /Heading / Sub-heading /Tariff item Description of Goods Tax Rate 90 1518 Vegetable 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 5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 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 Revenue regarding the entry no 27. Finally, we come to a conclusion that 'spent earth oil' merits classification under Heading 1518, for the reasons explained above, and taxable at 5 % as per SI.No.90 of Schedule I of notification No. 01/2017 Central Tax (Rate) Dt.28.06.2017. RULING (Under Section 98 of Central Good ..... X X X X Extracts X X X X X X X X Extracts X X X X
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