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2019 (3) TMI 1867 - AAAR - GST'Waste generated' during the Solvent Extraction process or not - Mahua De-oiled cake/ De-oiled Rice Bran being used as an ingredient of Cattle Feed, Poultry Feed and other animal feeds - input tax credit of GST paid on purchase of Mahua Oil Cake/Rice Bran Oil cake - HELD THAT:- The de-oiled cake is neither a waste nor a by product and hence all the cited case laws become irrelevant to the present case. In fact two equally and completely commercially viable products emerge during the manufacturing process of solvent extraction viz. the oil and the de-oiled cake. Both these products are sold by a company with equal emphasis and both are commercially lucrative to the solvent extractor. In fact, the pellets undergo Desolventising process i.e. separation of normal-Hexane from the De-oiled bran subsequent to which the de-oiled bran is chemically tested for their oil and silica content to meet clients' specifications and finally it is sent to the bagging section for packing into branded unit packaging. It is unimaginable that investment into a desolventising plant and bagging unit will be made for a product which is allegedly 'unintended' or 'mere technical necessity'. In fact the de-oiled cake is a very much intended product in as much as it may affect the overall financial health of the company. Thus, through an elaborate process, chemical testing and packing, the de-oiled cakes are finally manufactured made marketable. So, the appellant's contention that the de-oiled cake is not manufactured but is generated during the course of manufacture of extracted oil, is contrary to the technical position and facts. Having settled the issue of sale of de-oiled cake being supply, it can be concluded that Section 17(2) of the GST Act 2017 is very much applicable. But first it has to be decided as to whether the specific items are exempted - De-oiled Rice Bran has been fully exempted from CGST vide entry no. 102A of Notification No.07/2018-CT(R) dated 25.01.2018. So, in terms of Section 17(2) of CGST Act 2017, the input credit attributable to the supply of this exempted goods i.e. de-oiled rice bran has to be reversed by the appellant. Classification of product de-oiled mahua cake - HELD THAT:- The product de-oiled mahua cake is not covered under heading 2304 or 2305 as different products have been classified under the same. Accordingly, we find support in the claim of the noticee that ‘de-oilded mahua cake' is classifiable under heading 2306 of chapter 23 of Customs Tariff Act” - Since 5% GST is applicable on the goods falling under chapter heading 2306, under nod. No. 01/2017 Central Tax (rate) dated 28 June, 2017, as amended, the appellant is required to pay GST @5% on the supply of de-oiled Mahua cake accordingly entitled to avail input tax credit on the same.
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