In re Sayaji Industries Ltd. (GST AAR Gujarat)
Maize Bran is used as a major supplement for cattle feed. The word ‘supplement’ is defined in dictionary as “a thing added to something else in order to complete or enhance it.” Therefore, Maize Bran is a product which is added to cattle feed to complete it or enhance it. This literally means that Maize Bran is not a cattle feed in itself but is added to cattle feed to enhance or improve its quality/nutritional value or to complete it. It is also seen from the submission of the applicant that they are time and again stressing on the fact that the maize bran produced by them is cattle feed and should be rightly classified on the basis of its use and be exempted under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. However, they have failed to clarify as to how the said product can be considered as ‘cattle feed’ when the definition itself says that “it is used as a major supplement for cattle feed. Further, they themselves have submitted that maize bran is usually a mixture of the bran fraction and other by-products and a very loosely defined product of highly variable composition usually sold as a major ingredient for cattle feed. They have also stated that they supply Maize Bran as feed commodities to local farmers and even manufacturers engaged in manufacturing cattle feed who often mix maize bran with other maize processing by-products. It can also be construed from the above that the maize bran supplied by them to the farmers would not be directly fed to cattle but be mixed with the cattle feed before feeding it to the cattle. In view of the above, it can be seen that maize bran in itself is not a cattle feed but is a major ingredient used in the manufacture of cattle feed as submitted by the applicant. Thus, the applicant by themselves have contradicted their contention through their submission.
Applicant is classifying their product “Wet Bran” and not as “cattle feed”. It is also seen that ‘Maize Bran’ is specifically mentioned in Sub-heading No.23021010 of the First Schedule to the Custom Tariff Act, 1975 (51 of 1975) and the word ‘Bran’ is specifically mentioned in Sr.No.103A of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. In view of the above, we are of the opinion that the product ‘maize bran’ does not warrant classification under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) as the product does not classify as ‘cattle feed’ and is correctly classifiable as ‘Bran’ under Sr.No. 103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 for the reason that it cannot be considered as a ‘cattle feed’ by definition.
The product ‘Maize Bran’ manufactured and supplied by M/s. Sayaji Industries Ltd. is covered under Entry Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which rate of GST chargeable is 5% (2.5% SGST + 2.5% CGST).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, GUJARAT
1. M/s. Sayaji Industries Ltd. P.O. Kathwada, Ahmedabad having a GSTIN : 24AADCS0861R1ZZ, is a company filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the SGST Act.
2. M/s. Maize Products an applicant is engaged in the manufacture and taxable supply of Maize Starch and its derivatives in their plant at P.O. Kathwada, Maize Products, A’bad-382430. In the course of manufacture Maize Bran is produced by corn wet milling which is a by-product and is sold as cattle feed.
2.1 Bran is the hard-outer layers of cereal grain. Along with germ, it is an integral part of whole grains and is often is produced as a by-product of milling during the production of refined grains. Maize Bran is one such inevitable byproduct of various maize processing industries.
2.2 The production of Maize bran amounts to 13% of total production of the Applicant. It is usually found in three different forms as mentioned below :
a) Maize Bran dry b) Maize Bran wet c) Maize Bran (CSL mixed)
2.3 Maize Bran theoretically consists of the bran coating removed in the early stages of wet milling.
2.4 Maize Bran is composed of approximately 12-25% starch, 10-13% protein, 33-42% hemicelluloses, 15-18% cellulose, 3-6% oil and 1-2% other components. A maize bran stream coming from dewatering process contain about 30 to 50% solids. The maize bran is usually a mixture of bran fraction and other by-product and is therefore, a very loosely defined product of highly variable composition usually sold as a major ingredient for cattle feed.
2.5 The Applicant supply Maize Bran as feed commodities to local farmers and even manufacturers engaged in manufacturing cattle feed who often mix maize bran with other maize processing by-product.
2.6 The applicant further submitted that under the Central Regime they were classifying the Maize bran under CTH No. 23021010 of the First Schedule to CETA, 1985. The applicant submitted the copy of ER-1 Return for the Month of April-2017 to June-2017 filed under the Central Excise regime and marked as Annexure-2.
Taxation under GST Regime
3.1 The applicant has submitted that Central Govt. has issued Not. No. 01/2017 C.T (Rate) dated 28.06.2017 in exercise of power under Section 9(1) of CGST Act, 2017. The said Notification by way of explanation (1) thereto clarifies the term “Tariff item”, “sub-heading” “heading” and “Chapter” shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
3.3 Further, applicant submits that the Explanation-2 to the aforesaid Notification clarifies that the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall apply to the interpretation of the aforesaid notification specified under CGST.
3.4 The applicant submits that in the Notification No. 01/2017- CT (Rate) Dated 28.06.2017, an entry 103A was inserted vide Corrigendum F. No. 354/117/2017-TRU Pt.- CT (rate) dated 12.07.2017 is Schedule-I to tax bran, sharps and other residues , whether or not in the form of pellets, derived from the sifting , milling or other working of cereals or of leguminous plants at the rate of 2.5% CGST.
3.5 Relevant entry 103A for the purpose of present application is as under :
Schedule-I
