12% GST Payable on Rapeseed / Soya oil based dielectric transformer fluid: AAR

By Editor4 Goods and Services Tax Judiciary May 9, 2018

TaxGuru Citation: 2018 taxguru.in 1259
Case Name: In re M & I Materials India Private Limited (GST AAR Maharashtra)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: Advance Rulings, Maharashtra AAR

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In re M & I Materials India Private Limited (GST AAR Maharashtra)

Q. What is the correct Harmonized System of Nomenclature (HSN) code and the applicable GST rate for our products MIDEL eN 1204 (rapeseed oil based dielectric transformer fluid) and MIDEL eN 1215 (soya oil based dielectric transformer fluid) in terms of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017?

A. As per the discussions and findings under the heading ‘Observations’, the question is answered thus –

The product would fall in schedule entry 27 of Schedule II of the Notification No. 1/2017-Central /State Tax (Rate) under Tariff Heading 1518 and thereby taxable @ 6% each of Central Goods and Services Tax and Maharashtra Goods and Services Tax.

FULL TEXT OF ADVANCE RULING IS AS FOLLOWS:-

MAHARASHTRA AUTHORITY FOR ADVANCE RULING

(constituted under section 96 of the Maharashtra Goods and Services Tax Act, 2017)

BEFORE THE BENCH OF

(1) Shri B. V. Borhade, Joint Commissioner of State Tax

(2) Shri Pankaj Kumar, Joint Commissioner of Central Tax

GSTIN Number, if any/ User-id		27AAICM3416B1ZU
Legal Name of Applicant		M&I MATERIALS INDIA PRIVATE LIMITED
Registered Address/Address provided while obtaining user id		PLOT NO. 1249/50, KALAMBOLI WAREHOUSING COMPLEX, ROAD NO. 14, KALAMBOLI, NAVI MUMBAI – 410218.
Details of application		GST-ARA, Application No. 23 Dated 09.02.2018
Concerned officer		State Tax Officer (RAI-SGST-C-018)
Nature of activity(s) (proposed / present) in respect of which advance ruling sought
A	Category	Wholesale Business, Warehouse/Deport
B	Description (in brief)	IMPORT AND SALE OF GOODS
Issue/s on which advance ruling required		(i) classification of goods and/or services or both
Question(s) on which advance ruling is required		As reproduced in para 01 of the Proceedings below

PROCEEDINGS

(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)

The present application has been filed under section 97 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&I MATERIALS INDIA PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the applicability of GST on:

What is the correct Harmonized System of Nomenclature (HSN) code and the applicable GST rate for our products MIDEL eN 7204 (rapeseed oil based dielectric transformer fluid) and MIDEL eN 7275 (soya oil based dielectric transformer fluid) in terms of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017?

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 provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.

02. FACTS AND CONTENTION – AS PER THE APPLICANT

The submissions, as reproduced verbatim, could be seen thus-

“Statement of relevant facts having a bearing on the question(s) raised

1. M&l Materials India Pvt. Ltd (hereinafter referred to as M&l India’ or the ‘company’ or ‘we’ or ‘us’ ) is a wholly owned subsidiary of M&l Materials Ltd. based in UK (hereinafter referred to as ‘M&I UK’).

2. The company commenced its operations in the month of April 2014 and is, inter alia. engaged in the following activities:

2.1 Import of ‘Midel Dielectric Fluids’ from M&l UK and subsequent sale in India

2.2 Establishing local warehousing and distribution capability.

2.3 Marketing and business development activity with a focus on assisting in the development of the Midel Dielectric Fluids business in India

2.4 Provide local first line support for any technical queries.

3 The details of the products for which the Advance Ruling is being sought is as follows:

3.1 MIDEL eN 1204

3.1.1 It is a vegetable oil based dielectric transformer fluid It is a chemically modified rapeseed oil based natural ester

3.1.2 It is used as electric insulator in transformers Its function is to provide electrical insulation, suppress corona and arcing, and to serve as a coolant.

3.1.3 We have classified MIDEL eN 1204 as per the Harmonized System of Nomenclature (HSN) code under the First Schedule of the Customs Tariff Act, 1975 (hereinafter referred to as “the Customs Tariff’) under the entry 15180039 The relevant extract of the entry is reproduced hereunder for ease of reference:

“1518.00 Animal or vegetable fats and oils and their fractions, boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516: inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this Chapter, not elsewhere specified or included:

1518 00.39 – Other

[emphasis supplied]

3.1.4 The applicable Indian Standards (IS) of the Bureau of Indian Standards (BIS) under the Bureau of Indian Standards Act, 1986 is IS 16659:2017.

3.2 MIDEL eN 1215

3.2.1 It is a vegetable oil based dielectric transformer fluid. It is a chemically modified soya based natural ester.

3.2.2 It is used as electric insulator in transformers. Its function is to provide electrical insulation, suppress corona and arcing, and to serve as a coolant.

3.2.3 We have classified MIDEL eN 1215 as per HSN code under the First Schedule of the Customs Tariff Act, 1975 under the entry 15180039.

3.2.4 The applicable Indian Standards (IS) of the Bureau of Indian Standards (BIS) under the Bureau of Indian Standards Act, 1986 is IS 16659:2017.

4. The rate of GST applicable on supply of various goods is notified vide Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017, as amended from time to time (hereinafter referred to as “the Notification”).

4.1 Under the Notification, the HSN code 1518 appears under “Schedule 1 – 2.5%” as well as “Schedule 2 – 6%”. The relevant extract is reproduced hereunder for ease of reference: