TMI Blog2019 (7) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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-oiled Mahua cake' is classifiable under Heading 2306 of Chapter 23 of Customs Tariff Act - Since 5% GST is applicable on file goods falling under Chapter Heading 2306, under Notf. No. 1/2017-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. - Order No. 04/AAAR/18/3/2019 - - - Dated:- 18-3-2019 - Shri Rajeev Tandon, Member (CGST) and Smt. Amrita Soni, Member (SGST) ORDER These proceedings are the outcome of the directions of Hon'ble High Court Allahabad, given in a order issued by the Court (Writ Tax No. 1605 of 2018), dated 14-12-2018 [2019 (20) G.S.T.L. 727 (All.)], Court ordered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Order No. 07, dated 25-5-2018, M/s. Khandelwal Extractions Ltd., 51/47, 3rd Floor, Kesharwani Bhawan, Naya Ganj, Kanpur, Uttar Pradesh-208001 preferred an appeal before the AAAR on the grounds as under - (i) Advance Ruling Authority has wrongly denied the entire input tax credit and on the settled jurisprudence. (ii) Advance Ruling Authority was bound by the judicial discipline laid down by the Hon'ble Apex Court. (iii) Advance Ruling Authority has failed to discuss the fact if the emergence of 'waste' is to be treated as supply at all. (iv) De-oil Cake is generated as waste and cannot be treated as a 'supply by way of manufacture'. (v) Application of Section 17(2) CGST Act, 2017 does not extend to involuntary generation of 'Waste'. (vi) Marketability is not a criterion to classify an item as 'waste'. 4. Applicant was granted personal hearing on 26-9-2018, applicant requested for the adjournment of the hearing but due to the time bound nature of the hearing it could not be accepted. 5. Written submissions of the applicant was ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it be overridden by residual entry. (v) Whether the input tax credit of GST paid on purchase of Mahua oil cake, shall be cohesively allowed and vi) Whether the provision of Section 17(2) of the CGST Act, 2017 shall still apply when the classification under Chapter 2306 stands final. 7. The appellant vide his appeal application has prayed for : (a) Setting aside/modifying the order of AAR. (b) The term waste is not defined in CGST Act, 2017 and therefore the case laws of Apex Court and Higher Courts are having binding value on the scope of the term. (c) The 'Waste' generated during the manufacturing process cannot be treated as 'supply' in light of judicial pronouncements since it is mere technological necessity. (d) The provisions of Section 17 and more specifically sub-section (2) of CGST Act, 2017 are inapplicable. (e) Entire Input Credit should be allowed since the whole of it is being used in the manufacture of solvent extract oil. 8. At the very outset, we concede the contention of the appellant that the precedence value of the decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erated during the course of manufacture of extracted oil, is contrary to the technical position and facts. The cited decisions of Balarampur Chini Mills and Hindalco Industries Ltd., accordingly, are inapplicable as in the present case de-oiled cake is obtained after desolvetising process on which chemical test is done and are then packed in unit containers, all of which come under the ambit of intended manufacture. 10. Hon'ble Supreme Court, in the case of Commissioner of Central Excise v. Goyal Proteins Ltd. [2017 (355) E.L.T. A27 (S.C.) ] has maintained the order of Hon'ble High Court, Rajstahan upholding the decision by Hon'ble CESTAT of remanding the case with direction to accept the party's offer to reverse entire input credit used during manufacture through solvent extraction resulting in the emergence of de-oiled cake and gum. Further, the issue of de-oiled cake not being 'waste' has reached finality in the case of State of Karnatka v. M.K. Agro Tech (P) Ltd. [2017 (6) G.S.T.L 125 (S.C.) ] and the decision is squarely applicable to the present case as the broader facts and principles are similar. The Hon'ble Apex Court uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r agreed to be made without a consideration will also amount to sale. Supply includes (a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, (b) importation of service, whether or not for a consideration and whether or not in the course or furtherance of business, and (c) a supply specified in Schedule I, made or agreed to be made without a consideration Schedule II , in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services. Activities which are not Supply Activities and transactions specified in Schedule III - Services by an employee to the employer in the course of or in relation to his employment; Services of funeral, burial, crematorium or mortuary including transportation of the deceased. Actionable claims, other than lottery, betting and gambling Sale of land/Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of vegetable fats or oils, other than those of heading 2304 or 2305 [other than cotton seed oil cake] 17. Further, Entry No. 2304 covers oil-cake and other solid residues whether or not ground or in the form of pellets, resulting from the extraction of soyabean oil whereas Entry No. 2305 covers oil cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extraction of groundnut oil. 18. From the above it is evident 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-oiled Mahua cake' is classifiable under Heading 2306 of Chapter 23 of Customs Tariff Act . 19. Since 5% GST is applicable on file goods falling under Chapter Heading 2306, under Notf. No. 1/2017-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. 20. We also find that in addition to the written subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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