Case Law Details
In re Coastal Fats & Oils Private Limited (GST AAR Andhra Pradesh)
The solvent Extracted spent Earth oil is taxable at 5 % as per SI. No. 90 of Schedule I of notification No. 01/2017 Central Tax (Rate) Dt.28.06.2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, ANDHRA PRADESH
1. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and SGST Act, 2017 are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the APGST Act.
2. The present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 and AP Goods & Services Tax Act, 2017 (hereinafter referred to CGST Act and APGST Act respectively) by M/s. Coastal Fats & Oils Private Limited (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017.
3. Brief Fact of case
The applicant (M/s. Coastal Fats& Oils Private Limited, ozili) is manufacturer of ‘spent earth oil’. The solvent extracted spent earth oil is used in the manufacturing of soaps and Poultry feeds. The main input used in manufacturing of spent earth oil is ‘spent earth’ which is taxable at 18% under the GST Act.
The process of manufacture of ‘Spent Earth Oil’:
- ‘Spent Earth Oil’ is residual vegetable oil recovered from Spent Bleaching Earth (SBE) commonly known as Spent Earth. Spent Earth is a mixture of clay minerals and vegetable oil. It is obtained as a solid waste from the edible oil refining industry.
- The clay present in bleaching earth absorbs colour 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 which GST tax rate is 12 % as per SI.No. 27 of Schedule II of Notification No. 1/2017
5. Applicant’s Interpretation of Law:
The applicant states that in order to arrive at the HSN code for the classification of goods manufactured, the nature of the commodity ‘Spent Earth Oil’ is to be examined.
- Spent Earth Oil is recovered from Spent Bleaching Earth, commonly known as Spent Earth.
- Spent Bleaching Earth is by-product of Vegetable oil refinery, Spent Bleaching Earth is used to in the vegetable oil refining process to reduce the colour of the edible oil. In the process the Spent Bleaching earth absorbs 15 to 20 % of some colour pigments and edible oil in to it.
- The oil content absorbed in the Spent Earth is recovered through Solvent Extraction Process using Food grade Hexane.
- Thus the Spent Earth oil recovered from Spent Earth is essentially vegetable oil, which is a raw material input for vide range of industries such as poultry feed manufacturing industries, soap making companies, etc.,
- Solvent Extracted Oil is a Vegetable Oil, not directly used for Human Consumption. It is an industrial input to other industry.
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