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TMI Blog2021 (11) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... emption category. Merely because such a finished product of fish meal produced by the petitioners' industries are being utilised also for the purpose of further manufacturing of further animal feed or poultry feed, by that reason itself, it cannot be stated that, it is only a raw material and not a finished product - The Central Government while giving Exemption Notification No.2/17, though originally included only Entry Nos. 2302, 2304, 2305, 2306, 2308 2309, subsequently, issued a corrigendum that entry 2302 should be read as 2301 2302. Therefore, 2301 also is included. Section 168(1) makes it clear that, only for the purpose of uniformity in the implementation of the Act, orders or directions to the Central Tax Officers, as deem fit, may be issued by the Board. Therefore, most probably, such kind of orders, instructions or directions must be procedural in nature, not substantive in nature - The exemption provided by the Central Government by exercising its powers either under Section 11(1) of CGST Act, 2017 or under Section 6(1) of IGST Act, 2017 are the substantive right provided to the stake-holders by giving such exemption. Therefore, such kind of exemptions can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8th June 2017, in short would be called as Notification No.2/17 . 1.4. In Notification No.1/17, the Rate of Tax (Schedules) for specified goods under CGST under these schedules ie., Schedule I to VI have been provided. This notification and Notification No. 2/17 were issued by the Central Government in exercise of their powers conferred by Sub-Section 1 of Section 9 11, respectively, of the Central Goods and Services Tax Act, 2017, [In short, 'CGST Act']. 1.5. Under Notification No.1/17, for goods specified in first Schedule, the rate of tax has been fixed as 2.5% for Central share that means totally, 5%. Like that, in second Schedule goods, it is 6% ie., 12% in total. In third Schedule, it is 9% ie., 18% in total. In fourth Schedule, it is 14% i.e., 28% in total. Like that, in fifth Schedule, it is 1.5% ie., 3% in total. In 6th Schedule goods, it is 0.125%, ie., 0.250% in total. 1.6. Insofar as the present issue is concerned, we may take the table for Schedule I goods alone. The goods specified in Schedule I are liable to be taxed at the rate of 5% GST. 1.7. Number of items in various serial numbers have been enumerated under schedule I, wherein Sl.No.103 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded are prawn and shrimps feed and fish meal in powdered form , respectively. These tariff item entries 2301 2309 had been included in Sl.No.102 of Notification No.2/17. Infact, the tariff item 2301 was not originally included, however, by subsequent corrigendum notification in Notification No.354/117/2017-TRU dated 27.07.2017, the corrigendum is issued to the effect that in Sl.No.102 in column (2), for 2302 read 2301, 2302 . 1.13. Subsequently, by an amendment notification issued in Notification No.28/2017 I.T. (Rate) dated 22.09.2017, an amendment has been made, where, in clause (vi), it has been mentioned that, in Sl.No.102, for the entries in Column (2), the entries 2301, 2302, 2308, 2309 shall be substituted. Thereby, the six entries which were included in Sl.No.102 of Notification No. 2/17, has been made only as four entries. 1.14. However, it is to be noted that, among the four entries, Entry No.2301 2309 continue to be form part of Sl.No.102 as per the amended Notification dated 22.09.2017. 1.15. Therefore, the items which are covered under Entry No.2301 as well as 2309 are fully included in Sl.No.102 of Exemption Notification No.2/17, referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tic feed, animal feed, cattle feed, poultry feed etc. These raw materials/inputs cannot be directly used for feeding animal and cattle. The Larger Bench of the Hon ble Supreme Court in the Commissioner of Customs (Import), Mumbai v. Dilip Kumar [2018 (361) E.L.T. 577] has laid down that inputs for animal feed are different from the animal feed. Said S. No. 102 covers the prepared aquatic/poultry/cattle feed falling under headings 2309 and 2301. This entry does not apply to raw material/inputs like fish meals or meat cum bone meal (MBM) falling under heading 2301. 1.21. By virtue of this Circular having been issued by the Board, the revenue has taken a stand that, the product of the petitioners ie., fish meal, since is also to be used as a raw material for the purpose of making cattle / poultry / aquatic feed, which is not exempted, therefore, tax are to be levied on these items at the rate of 5% and accordingly, they inspected the premises of the petitioners' factories and demanded the tax and pursuant to which, the concerned officials of the Revenue ie., from Directorate General of GST Intelligence [DGGI] had issued summons that, there would be an enquiry proceedings co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in powdered form finished product as one of the ingredients or raw material for preparation of further form of poultry feed or animal feed. 2.4. Therefore, pointing out these differences, the leaned Counsel would canvas the point that, merely because the very same finished product called fish meal in powdered form , of the petitioners' industries is also being used as one of the raw material or input for preparation of further finished product, it cannot be stated that it is only a raw material and not a finished product. 2.5. Therefore, in his first limb of arguments, learned Counsel would contend that, since the product of the petitioner industries namely, fish meal in powdered form , is a finished product and is totally exempted and covered under entry 2301 2309, therefore, since these entries have been included in Sl.No. 102 of the Exemption Notification, such a total exemption shall be given to the finished products of the petitioners' industries. 2.6. The second limb of arguments is that, assuming they admit that the fish meal is not a finished product completely from the point of view of its usage and therefore, it is not entitled to seek exemption und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of Customs, Bombay reported in (1997) 6 SCC 564, namely what is the interpretation rule to be applied while interpreting the tax exemption provision / notification, when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied. 2.10. Only to answer the said query posed before the Constitution Bench, the issue was discussed in detail and ultimately, it was held that, when there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the Revenue. 2.11. Pointing out this, learned Counsel would contend that, on the entire reading of the judgment in Dilip Kumar case, he does not find anything, as has been claimed by the Board in para 4.2. of the impugned Circular, has been held by the Hon'ble Supreme Court. 2.12. Therefore, learned Counsel would contend that, the very reasoning cited by the Board in para 4.2. of the impugned Circular itself is under wrong premise. Therefore, even that reason cannot be countenanced to justify the clarification sought to be given through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, poultry feed and cattle feed including grass hay and straw supplement and husk of pulses, concentrates and additives, wheat brawn and de-oiled cake. None of the above products are raw materials such as fish meal. 5. It is submitted that the Fish meal is the raw material and is distinct from the feed or additives or supplements. As per the Indian Standard - IS 4307-1983 (reaffirmed 2014), specification for fish meal as live stock feed ingredient published by Indian Standard Institution, fish meal suitable for use as live stock feed ingredient is made either by washing, cooking, pressing, drying and pulverizing non-fatty or fatty fresh fish or fish waste. It can be prepared by heat treating non-fatty unsalted dry fish to such an extent as would ensure destruction of harmful micro organism, followed by pulverising the treated material to required mesh size. As per the standards the fish meal shall be obtained from fresh fish and / or fish wastes or from unsalted dried fish or all of them, after eliminating poisonous fishes. Fish meal is a product obtained from cooking, cleaned, dried, un decomposed whole fish or fish cuttings, either or both, with or without extraction of par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feed including shrimp feed and prawn feed, poultry feed and cattle feed including grass, hay and straw supplement and husk of pulses etc. Therefore, none of the above products are raw materials such as fish meal. He further submits that at the same time, the fish meal is the raw material and is distinct from the feed or additives or supplements. Fish meal is a product obtained from cooking, cleaned, dried, un-decomposed whole fish or fish cuttings, either or both, with or without extraction of part of the oil. 3.2. He would also submit that, under Exemption Notification No.2/17, exemptions were given to prepare aquatic feed, prawn feed, poultry feed, cattle feed etc., including grass, hay straw, supplement husk of pulses, concentrates additives, wheat bran de-oiled cake falling under chapter heading 2302, 2308 2309. That means, fish meal falling under Chapter heading 2301 cleared as input / raw material to animal / aquatic / poultry / cattle feed are not covered in the said Sl.No. 3.3. Therefore, a clear dichotomy can be formed, where the fish meal in raw material form cannot be sought for any exemption under Exemption Notification No.2/17, whereas, if a fish meal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners that the petitioners' production of fish meal is an end product and therefore, it is to be exempted, is unacceptable. 3.7. Only in order to clear this doubt, and to have uniformity in implementing the provisions of the Act, such a clarificatory Circular was necessitated and that was issued of course by exercising powers of the Board under Section 168 of the Act and that is how the impugned Circular has been issued. Therefore, it is fully under the domain of the Board to issue such Circular to give a clarification, by which, no new classification since has been introduced, the impugned circular is sustainable, he contended. 4. I have considered the rival submissions elaborately made by the learned Counsel appearing for both sides and also have perused the materials placed before this Court. 5. Though such an extensive submissions were made in this batch of cases, by learned Counsel appearing for both sides, the issue to be answered, in the considered opinion of this Court, is in a very narrow campass. 6. After the GST regime, which came into effect from 01.07.2017, the Customs Tariff Act, 1975 classification selectively has been adopted by the GST regime. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sl.No. 102 of Exemption Notification No.2/17. 11. Therefore, it may be either under 2301 or may be under entry 2309. In both way, the fish meal is explicitly provided under exemption category. 12. Only in this context, the Revenue has taken a stand that, if the fish meal is utilised for feeding the fish or aqua including prawn, then it can be treated as a finished product, for which, exemption can be claimed. However, this fish meal is being sold to another manufacturer to prepare the feed for cattle, poultry etc. Therefore, in such manufacturing process, this so called fish meal will be used only as raw material. Therefore such kind of raw material cannot be treated as an exempted one within the meaning of entry 2301 or under entry 2309. 13. The fallacy of the said argument, even if we take the reason cited in para 4.2. of the impugned circular, may appear to be a clever distinction, but factually it is not so. The reason being that, what is the nature of the product being manufactured by an industry or a manufacturer is the matter. Here, both under entry 2301 as well as 2309, the fish meal in the form of finished product used for feeding the fish, aqua, including prawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.2/17 under Section 11(1) of the IGST Act, 2017 as well as an Amendment Notification issued under Section 6(1) of CGST Act, 2017, if we take a coherent and conjoint reading, it explicitly makes it clear that the goods covered under four entries namely 2301, 2302, 2308 2309 are exempted. 19. If at all anything to be taken away from the purview of such exemption already provided under those entries, it is for the Central Government to come to the rescue of the Revenue by issuing further amendment to the Exemption Notification No.2/17 as amended by the Amendment Notification No.28/2017 and can issue a fresh or additional amendment, showing the proper intention of the Central Government to take away the exemption provided in any particular type of goods or product covered under the four entries referred to. Such an action has not been taken by the Central Government so far. 20. In this context, it has been pointed out by the learned Counsel for the petitioner that, if at all the impugned Circular have been issued by the Board, that should have been issued by the Board exercising the powers under Section 168. For the sake of convenience, Section 168 of the said Act is extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the Hon'ble Supreme Court is that, if there is any ambiguity in the notification like exemption notification, such benefit arising out of ambiguity be conferred on the assessee. However, the said law laid down in Sun Export Corporation case has been negated and overruled by the Constitution Bench in Dilip Kumar case, referred to above, where the Hon'ble Supreme Court ultimately has held as follows: 52. To sum up, we answer the reference holding as under (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled. 53. The instant civil appeal may now be placed before appropriate Bench for considering the case on merits afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) No refund shall be made of all such tax which has been collected, but which would not have been so collected, had sub-section (1) been in force at all material times. 29. Though only for a particular period such exemption has been provided under the aforesaid provision of the Finance Act, 2020, this has been quoted by the learned Counsel for the petitioners to substantiate the very intention of the Legislature that, such kind of exemption can be provided for levying Central Tax or collecting such tax on the supply of fish meal. 30. This is what is indicated by this Court in the earlier part of this order that, if at all the exemption provided by the Central Government in issuing the Exemption Notification No.2/17 is to be revisited or reviewed and certain items have to be taken away from the purview of exemption, such exercise shall be undertaken either by the Parliament by making a law as has been done in Finance Act, 2020 or by the Central Government by exercising their powers either under Section 11(1) of the CGST Act, 2017 or under Section 6(1) of the IGST Act, 2017, as under such exercise of powers only those Exemption Notifications No.2/17 as well as the Ame ..... X X X X Extracts X X X X X X X X Extracts X X X X
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