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2022 (7) TMI 500 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESHClassification of goods - Rate of tax - solvent Extracted spent Earth oil - whether spent earth oil merits classification under HSN 1518 0039 on which GST tax rate is 12 % as per SI.No. 27 of Schedule II of Notification No.1/2017? - HELD THAT:- Recovery of oil adsorbed in the spent bleaching earth (SBE) is extracted by solvent extraction method using hexane as the solvent. The extracts obtained from the process will be filtered and the solvent will be removed under reduced pressure and at defined temperature in a rotary evaporator. In this extraction method, it is very vital to choose the most suitable solvent for extracting the targeted components because different solvent polarity will dissolve different compounds. The boiling point of hexane is 65 0C which makes it used widely as a solvent. After the extraction, the oil-solvent is then separated between the oil from hexane which requires large amount of energy. To remove the hexane from crude oil, the miscella (the oil/solvent mixture leaving the solvent extractor is commonly referred to in the industry as 'miscella') is treated in a vacuum distillation process. The hexane evaporated during the distillation is condensed and separated from water in a decanter. The recovered hexane is then reused in the extractor. Sl.no 90 is examined in light of the solvent extraction method. The processes adopted as per the entry are boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified. In the instant case, Spent Earth Oil is obtained/ extracted by or blown by heat at certain temperatures, in the presence of food grade solvent Hexane, which is an inert gas. Hence, the processes indicated above apply to the present case on hand. Coming to the Sl.no 27, the first limb of the entry deals with 'Animal fats and animal oils', which is irrelevant to the case at hand, as it's a vegetable oil - the Revenue argues that the second limb is applicable to the present case that spent earth oil is inedible in nature as it's end use is intended for 'soaps and poultry feed'. But, as a matter of fact, the above entry describes 'inedible mixtures or preparation of Vegetable fats or Oils'. Considering the basic characteristics of the spent earth oil, it's merely a vegetble oil extracted from spent earth and it is certainly neither a 'mixture of vegetable oils' nor 'a preparation of vegetable oils'. Even more, it becomes immaterial in the present context, whether it's further qualified by the parameter of being 'inedible' or not. Thus, 'spent earth oil' merits classification under Heading 1518, and taxable at 5 % as per SI.No.90 of Schedule I of notification No. 01/2017 Central Tax (Rate) Dt.28.06.2017.
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