In re Madhurya Chemicals (GST AAAR Maharashtra)
Q1. Whether the classification of ‘Shatarnrut Chyavan’ falling under TSH 2309 90 10 of Customs Tariff Act, 1975 as adopted to GST attracting ‘NIL’ rate (0%) of IGST, (0%) CGST + (0%) SGST) as per Sr. No. 102 of Notification No. 02/2017 – Central Tax (Rate), dated 28.06.2017 is correct or not?
Ans: While deciding the classification of product claimed as animal feed supplements, it may he necessary to ensure that the said animal feed supplements are ordinarily or commonly known to the trade as products for a specific use in animal feeding. HS Code 2309 would cover only such products, which in the form supplied, are capable of specific use as food supplement for animal and not capable of any general use. As it has been established that the impugned product Shatarnrut Chyavan’ is an animal feed having specific use, viz.- increasing the milk production of the cattle and increasing the immunity of the cattle to fight diseases, and the said impugned product is also known in the market as the cattle feed supplement only, therefore, the said impugned product would be classified as animal feed supplement, and accordingly would merit classification under the Chapter Heading 2309 and under the Tariff Item 2309 90 10, and would not attract any GST in terms of SI. No. 102 of the Notification No. 2/2017-C.T. (Rate), dated 28.06.2017.
Q2. Whether the goods falling under TSH 2309 90 10 of Customs Tariff Act, 1975 as adopted to GST can be treated as ‘waste of sugar manufacture, whether or not in the form of pellets under heading 2303’ attracting 5% of IGST (2.5% CGST + 2.5% SGST) as per Schedule 1 (Sr. No. 104) of Notification No. 01/2017 -Central Tax (Rate) dated 28.06.2017 or not?
Ans: As regard the second question posed by the Appellant, we agree with the conclusion drawn by the MAAR that the question does not fall within the purview of Section 97 (2) of the CGST Act. 201 7. The question is not in relation to supply of goods or services or both, being undertaken or proposed to be undertaken by the Appellant. The MAAR cannot decide whether a specific product can be said to be a waste of sugar manufacture as the said question is not within the scope of Section 97 of the CGST Act. 2017. Also, the Appellant has not given any rebuttal of the finding of the MAAR that the said question does not fall under Section 97 of the CGST Act. 2017.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING,MAHARASHTRA
(Proceedings under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
1. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. 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 provisions under the MGST Act.
2. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act. 2017 and the Maharashtra Goods and Services Tax Act. 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/s. Madhurya Chemicals. Sr. No. 143 – 144. Industrial Estate. Kopargaon, List – Ahmednagar. 423601. (“the Appellant”) against the Advance Ruling No. GST-ARA-33/2019-20/B-40, dated 18.03.2020., pronounced by the Maharashtra Authority for Advance Ruling (herein after referred to as MAAR) The said Appeal has been filed along with the application for the condonation of delay of 30 days from the due date as prescribed under proviso to Section 100(2) of the CGST Act. 2017. The Appellant has attributed the said delay to the closure of their offices on account of the ongoing COVID-19 Pandemic situation.
BRIEF FACTS OF THE CASE
3.1 The Appellant is engaged in manufacturing and marketing a product called ‘Shatamrut Chyavan’ which is a supplementary product, which increases the nutritional value of the molasses, and known as ‘compounded animal feed’. The said product improves the production of milk and fat by the cattle and works towards increasing their immunity.
3.2 The Appellant from the beginning of the GST era since 01.07.2017 has classified his product under the Heading 2309 of the first Schedule to the Customs Tariff Act. 1975 as applicable to the GST, thereby availing exemption from the payment of GST in terms of SI. No. 102 of the Notification No. 2/2017-C.T. (Rate), dated 28.06.2017. of the CGST Act. 2017.
3.3 There are a number of processes, which are carried out to increase the nutritional value of the molasses to make the subject product. Molasses is a by – product obtained from sugarcane and it contains different types of organic and inorganic ingredients.
3.4 While making feed supplement from molasses, first molasses is poured into a mixture, and is subjected to steam coming from the boiler and thus it is diluted to some extent. Extreme care is taken while diluting that it doesn’t get fermented, for this purpose, some chemicals, which are not injurious to health, are added to it and then this mixture is filtered. Then powder of some ayurvedic plants which are essential and beneficial for increasing milk production from the cattle is added to it. This mixture is continuously stirred by stirrer for around 8-10 hours, and after becoming completely homogeneous, it is packed into drums of 5 Kg and sold into the market.
3.5. The ingredients of a final product ‘Shatamrut Chyavan’ and the benefits thereof, are enumerated in the table below: Based on these ingredients present in the subject product, it has been stated by the Appellant that the subject product, namely. Shatamrut Chyavan. increases the nutritional value of the molasses, which if fed to the cattle, increases the dairy production and its immunity.
