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TMI Blog2024 (7) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... t chemical modification and hence their product is chemically modified neem oil. Since, the product is neem oil mixed with different solvents resulting to new product which remain neem oil in its essential character. Thus, as per rule 3 (b) of General Rules for the interpretation of the Harmonized System, the product non-edible Neem Oil is classified under HSN code 15159020. The product do not classified as fertilizer under chapter 31 of HSN codes. Applicability of Notification No. 09/2022-Central Tax (Rate) dated 13.07.2022 on the applicant - HELD THAT:- Vide Notification No. 09/2022-Central Tax (Rate) dt. 13.07.2022, under the powers conferred by clause (ii) of the first proviso to sub section (3) of section 54 of the CGST Act 2017, certain goods falling under chapter 15 and 27 have been specified in respect of which no refund of unutilized input tax credit shall be allowed , where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies of such specified goods (other than nil rated or fully exempt supplies) - Non-edible Neem Oil manufactured by the applicant having HSN code 1515 is covered by Notification No. 09/2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay GST, hence is admissible under Section 97 (2) (a) of the CGST Act 2017. Further, as per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. 5. Statement of relevant facts having a bearing on the question (s) raised. i. Because the applicable GST rates on inputs, input services and outputs, for the applicant comes under inverted duty structure as per first proviso to section 54 (3) (ii) of CGST act 2017, as the chemicals (inputs) mentioned the application i.e. like nitrogen, phosphorous , potassium, etc. are taxed at 18% and 12% and the final output i.e. nonedible neem oil and neem cake are taxed at 5 %, thus leading to large amount of input tax credit getting blocked and not refunded due to applicability of Notification no 09/2022-Central Tax (Rate) on HSN 1515. ii. Also 50% of the cash credit limit facility availed by the applicant from the bank is blocked with government in the form of accumulated GST ITC not refunded back, causing genuine, serious financial crisis mental hardship to the applicant. If such financial crisis hards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act UPGST Act would be mentioned as being under the 'CGST Act'. 10. We have gone through the submissions made by the applicant and have examined the same. The applicant in the present application has sought advance ruling on following question/clarification- 1. Under which HSN code the non-edible to be classified? 2. Whether notification no. 09/2022-Central Tax (Rate) dated 13.07.2022 issued under the Provisions applicable on the applicant? 11. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issues on which advance ruling is required- (i) Classification of goods and/or services or both. (ii) Applicability of a notification issued under the provisions of the Act At the outset, we admit both questions related to the applicant is squarely covered under Section 97 (2) of the CGST Act 2017. We therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puts being higher than the rate of tax on the output supplies of such specified goods (other than nil rated or fully exempt supplies). 15. Here it may be pointed out that the applicant appears to be in the business of extraction of neem oil falling under HSN code 1515 90 20 and the residue falling under HSN code 23061010. 16. The applicant is into business of production of neem oil, which in turn is used for coating urea. As per the tender document submitted by the applicant, it is seen that the specification of the item to be supplied by the applicant is neem oil. The detail is as under: Neem Kernel Oil / Depulped neem seed oil for urea coating as per specifications as follows : Purity Test Azadirachtin Content shall be 150 PPM minimum Moisture and Insoluble matter per cent by wt. Max : 1.0 Specific gravity at 30 degc : 0.85-0.95 Iodine value : 65-95 Saponification value : 160-205 Physical appearance-clear yellowish liquid, double filtered without any sediments and moisture toxicology-non taxic to plant and soil, eco friendly and biodegradable (Test certificate from govt. approved lab for each supplied consignment shall be submitted along with delivery challan). Here it may be fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product is supplied in name of neem kemel oil only. lt is also observed that the addition of solvent does not alter the essential character of the neem oil. Further, Chemical modification refers to a number of various processes involving the alteration of the chemical constitution or structure of molecules. Example of chemical modification is hydrogenation, esterification etc. Here, only Azadirachtin concentration is getting reduced but product remain essentially neem oil. Hence, the product non-edible Neem Oil cannot be said to be chemically modified. It is only concentration of Azadirachtin, which gives it essential character, is getting reduced. Now we refer to the General Rules of interpretation of tariff Rule 2 (b) which provides that classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. Rule 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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