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2018 (5) TMI 810 - AAR - GSTApplicability of GST - Classification of goods - Natural Easter Dielectric Fluid (Envirotemp FR3) - soyabean oil has to be modified or adapted for use in the transformers - falling under Sr. no. 27 of Schedule I or Serial no, 27 of Schedule II of Notification No. 1/2017 - Rate of GST would be 5% or 12% (i.e. 2.5% / 6% each of CGST and SGST) Held that: - The product before us is described as "Envirotemp FR3". The packing of the product describes "Envirotemp FR3 Fluid" as Fire Resistant Natural Ester Dielectric Coolant for transformers and related electrical apparatus. The product, as informed, is made up of refined soya beans oil after mixing some additives with the same. Various processes are involved in the manufacture of the impugned product. In step 6, some additives are added. But the applicant has not informed the details of these additives. In step 9, there is addition of some chemicals and again, the applicant has preferred not to divulge the details. To have a correct understanding of the product which would aid in ascertaining the correct classification, the applicant was asked to give a report from a recognized Laboratory - the test report also gives no details of the additives and chemicals which are added while manufacturing the impugned product. The information as per website of applicant is that certain ingredients in the form of additives and chemicals are added to vegetable oils to make them function as a substitute for mineral oil in transformers and other apparatus. The impugned product with the processes undergone to produce the end product of coolant for transformer does not remain vegetable oil per se. In the present case, we have a final product which is a transformer coolant. Though the Test Report shows the percentage of the chemicals to be 1% or the vegetable oils to be at 98.5% would not mean that a new commodity has not been produced. We have seen above an extract from an article that while there are data and international standards galore for mineral oils, there are as yet no IEC standards addressing the composition or testing of the natural ester oils with their different chemical composition. Each manufacturer has his own set of ingredients to obtain a coolant for transformer. That is precisely the reason that the applicant has not preferred to divulge the details, Thus, by addition of the needful additives and chemicals, we have different transformer coolants made from vegetable oils, each with their different chemical composition. The requirement of retaining the original fundamental structure would not be possible by the use of the additives and chemicals. The product is not being sold as a modified vegetable oil but as the product which is resulting from the adaptation of the vegetable oils to obtain a coolant for a transformer - the impugned product would not be covered by the part 1 of Heading 1518. Part 2 of Heading 1518 - Held that: - This part covers inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of the Chapter 15 - The present product is a preparation from vegetable oil. It is derived from soya bean oil. In addition, it is inedible. Therefore, it could very well be covered by the description "inedible preparations of vegetable oils'. There is no specific description which covers a "Fire Resistant Natural Ester Dielectric Coolant for transformers and related electrical apparatus". We are not in doubts that entry 90 of Schedule I of the Notification No. 1/2017- Central / State Tax (Rate) would not cover the impugned product - It is felt that the description "inedible preparations of vegetable oils' perfectly fits the impugned product and hence, the entry 27 of Schedule II of the N/N. 1/2017- Central / State Tax (Rate) which covers the aforesaid description would be applicable. Ruling:- Envirotemp FR3 falls under Serial no. 27 of Schedule II of Notification No. 1/2017-State Tax (Rate) dated 29th June, 2017 issued under the MGST Act, 2017 and Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017 issued under the CGST Act, 2017 is taxable at the rate of 6%.
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