In re Bhageerathi Foods (GST AAR Karnataka)
The Karnataka Authority for Advance Rulings (AAR) examined whether products manufactured by Bhageerathi Foods—derived from maize milling—qualified for GST exemption when marketed as cattle feed. The applicant sought clarification on three questions:
-
Whether the product, when supplied for direct feeding to cattle, is exempt.
-
Whether the exemption applies if the product is used as an ingredient in manufacturing cattle feed with higher nutritive value.
-
What documents are required from customers to claim the exemption.
Facts of the Case
Bhageerathi Foods proposed to manufacture Corn Grits/Meal and Corn Flour from maize. The first phase of processing involved sorting particles to required specifications. The unspecified particles from this process would be milled into a product suitable for cattle feed.
The applicant classified this milled product under HSN 2302 (Residues of maize milling) as cattle feed, claimed exemption under Entry 102 of Notification No. 2/2017-Central Tax (Rate) dated 28 June 2017, and sought the AAR’s ruling.
Relevant Legal Provisions
-
Entry 102, Notification No. 2/2017-Central Tax (Rate) exempts certain goods under headings 2301, 2302, 2308, and 2309, including “aquatic feed, poultry feed, cattle feed” and related items.
-
Explanations (iii) and (iv) of Notification No. 1/2017-Central Tax (Rate) direct classification according to the First Schedule to the Customs Tariff Act, 1975 and applicable section/chapter notes.
-
Chapter 23, Heading 2302 of the Customs Tariff covers residues from cereal milling, including maize, provided starch and ash content limits under Note 2(A) to Chapter 11 are not met.
AAR’s Examination of Classification
The AAR referred to WCO explanatory notes and determined that heading 2302.10 covers maize milling residues not meeting Chapter 11 Note 2(A) requirements for starch and ash content. The applicant did not provide test data on starch/ash content but sought exemption assuming classification under 2302.10.
First Question – Direct Use as Cattle Feed
The AAR agreed that if the product is classified under heading 2302 and is supplied directly as cattle feed for immediate consumption by animals, it qualifies for exemption under Entry 102. This is consistent with the wording of the notification, which includes cattle feed within its scope without further processing requirements.
Second Question – Use as Ingredient in Further Processing
The AAR distinguished situations where the product, although ready for direct cattle feeding, is instead used as an ingredient in manufacturing a new feed product with higher nutritive value. In such cases, the exemption under Entry 102 does not apply because:
