AAR in case of M/s Pratham Agro vet Industries – GST Tariff on Rice Bran
Question on which advanced ruling had been sought:
What is the GST Tariff on Rice Bran obtained by processing Rice husk of Poha and Mamra with different kind sludge/wax oil
What is Rice Bran:
Rice Bran is a product obtained by milling rice consisting of the seed coat, a fraction of the grain removed in milling, the germ, and broken grains, and used as a stock feed and medicinally as a source of thiamine
Rice Bran accounts for 10% (approximately) of weight of rice grains before processing.
GST Tariff on Rice Bran:
- De-oiled Rice Bran (HSN 2306) – Exempted w.e.f. 25.01.2018
- Other than De-oiled Rice Bran (HSN 2302) – Chargeable at 5%
One basic question comes to our mind after reading above text is – Why can’t the applicant take readily available HSN codes and GST tariff there on for his business. Refer below for the answer.
Process carried out by the applicant:
- Applicant purchases rice husk of poha and mamra with approximate 5% oil content, different kind of sludge/wax oil, the residue generated in refining of the oil
- After carrying process on the same along with above sludge/wax oil, manufactures Rice Bran and Non Edible C grade Oil
- Oil content of Rice Bran increases from 5% to more than 22% during the manufacturing process. This is due to transfer of oil content from sludge/wax oil to rice husk
- Further explanation of the process carried out by the applicant was not provided by the applicant
Authority’s Analysis:
- Applicant has not provided explanation of process carried out by the applicant and has jumped to the conclusion of the process
- Information provided by the applicant indicates that process carried out by the applicant uses rice husk and other raw materials.
- Mere use of rice husk in a process does not make it milling rice. Use of other raw materials and increased oil content indicates that finished product obtained is not a rice bran
- From the scarce information provided in the application, it is understood that the assessee is a chemical or allied industry. Further, the actual processes undertaken and the resultant product have not been accurately specified and as such, the only option available is to classify the said product in the residual entry of Chapter 38 pertaining to miscellaneous chemicals Products.
- Thus, the above product can be classified under Chapter 38259000 as the residual entry of the miscellaneous chemical products
Ruling:
The product Rice Bran (22+oil) shall be classified under Chapter heading 38259000 and attracts rate 9 % CGST and 9 % SGST
Binding of AAR:
An AAR is quite different from that of a case law. As per Section 103 of the CGST Act, 2017 it can be said that an AAR is binding only on the applicant and the concerned/ jurisdictional officer in respect to that particular matter dealt there, whereas a case law would be binding on every person having similar facts.
Whether Amendment in Law can be expected due to AAR?
AAR on matters impacting general understanding of any section or notification which may create dilemma among tax payers and other professionals might be considered by the GST Council and a clarification by way of notification may be released for the same.
One of the examples for the same can be AAR obtained on availment of KKC as Input Tax Credit in GST Regime through Form TRAN-01 as addressed in CMI FPE Limited (GST AAR Maharashtra) which was later amended in the Act to ensure binding of the same on all the tax payers.
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