In re M11 Energy Transition Pvt. Ltd. (GST AAR Karnataka)
In In re M11 Energy Transition Pvt Ltd GST AAR Karnataka, the applicant, engaged in the manufacture of biodiesel from used cooking oil, sought an advance ruling on the appropriate HSN classification of various biodiesel and High-Speed Diesel (HSD) blends, namely B20, B30, B40, B50, B60, and B70. The application was admitted under Section 97(2)(a) of the CGST Act as it pertained to classification of goods. The applicant contended that classification under GST follows the Customs Tariff Act, 1975 and the Harmonised System of Nomenclature (HSN). It was argued that B20, containing 80% HSD, qualifies under Heading 2710 as it contains more than 70% petroleum oils, specifically under tariff item 27102020, and is not liable to GST. For higher biodiesel blends (B30 to B70), the applicant claimed classification under Heading 3826, as these contain less than 70% petroleum oils.
The Authority examined the statutory provisions, GST rate notifications, HSN explanatory notes, and classification rules. It noted that petroleum products like HSD are excluded from GST, but such exclusion does not automatically apply to blended products. The classification depends on the proportion of petroleum oils. Heading 2710 applies where petroleum content is 70% or more, while Heading 3826 covers biodiesel and mixtures with less than 70% petroleum content.
