TMI Blog2020 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts which are obtained by subjecting them to processes which modify their chemical structure or other properties but at the same time retain their original fundamental character. It is the claim of the Appellant that the Pooja Oil is classifiable under Chapter sub-heading 1518 00 39. The said sub-heading pertains to other than edible grade vegetable oils and fats (other than linseed oil and dehydrated castor oil) which have been obtained by any of the processes mentioned in the heading i.e., boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified. The Appellant has not come forth with any evidence to prove that the Pooja Oil manufactured by them by mixing five different vegetable oils and blending with fragrance, brings about a modification in the chemical structure or any other properties of the oils while retaining the original fundamental structure - the manufacture of Pooja Oil does not involve subjecting the five different vegetable oils to any of the processes mentioned above. The five vegetable oils (i.e. rice bran oil. sesame oil (gingelly oil), coconut oil. castor oil and mahua oil) are merely mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the KGST Act. The present appeal has been filed under Section 100 of the CGST Act. 2017 and the KGST Act, 2017 by S.K. Aagrotechh. Survey No. 114, Gottigehalli Road, Kaggalalli, Kanakapura Taluk, Ramanagar District (hereinafter referred to as Appellant ) against the Advance Ruling No KAR ADRG 49/2019 dated 18.09.2019 = 2019 (10) TMI 1089 - AUTHORITY FOR ADVANCE RULING, KARNATAKA pronounced by the Karnataka Authority for Advance Ruling. Brief facts of the case: 1. The Appellant is a partnership firm and is a wholesale dealer in edible oil. The Appellant also manufactures Pooja Oil which is primarily a mixture of rice bran oil, sesame oil (gingelly oil), coconut oil. castor oil and mahua oil. A small quantity of fragrance is also mixed only for giving fragrance. 2. The GST rate Notification No. 1/2017-Central Tax (Rate) dated 28.07.2017 specifies two different entries for tariff heading 1518.Entry number 90 of Schedule-I of the said notification (GST rate of 5%) covers all types of vegetable fats and oils which have undergone processes like boiling, oxidization, dehydration etc. This entry specifically excludes those oils falling under tariff head 1516. The rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity for Advance Ruling under section 100 of the CGST Act, 2017 / KGST Act. 2017 on 23.10.2019 on following grounds: 6.1. Chapter Heading 1518 covers vegetable fats and oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516. It is therefore clear that entry 90 of Schedule I of the rate notification covers the following products: It covers all types of vegetable fats and oils; It also covers vegetable oils and fats in fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas form; This entry further seeks to cover such vegetable oils and fats which are chemically modified; It, however, excludes such oils which are falling under Chapter Heading 1516. 6.2 They submitted that this entry covers only vegetable fats and oils and that such oils could be chemically modified; that this entry does not make a distinction between edible grade and inedible grade oils. Therefore, any vegetable oil which is chemically modified even if inedible is covered under the said entry. 6.3 The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assified accordingly. They submitted that in the present case also, since the entry contained in Schedule I is more specific and covers all kinds of vegetable oils, whether or not chemically modified and whether or not such vegetable oils are edible. Hence, the pooja oil manufactured by the Appellant out of the vegetable oils merit classification under Schedule I of Chapter Heading 1518. 6.8 They submitted that the entry under Schedule-I does not specifically mention about the vegetable fats or oils being edible or inedible, which means that both edible and inedible oils are covered under this entry , provided the other criteria are fulfilled. 6.9. If the intention of the Government was to cover either edible oils or inedible oils, the same would have been mentioned specifically in the description, as can be observed in the description of other entries like 1517, wherein edible fats or oils has been categorically excluded. The Appellant submits that the product in question is inedible and meets the other conditions for qualifying classification under this entry. 6.10 In view of the above, the Appellant is of the view that the product, more appropriately, falls under tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorities, in the present case, observed that since the product under question is manufactured out of Vegetable fats/ oils and not from animal fats/ oils, therefore, the correct HSN Code of Energy-G premium Oil is HSN 1518 vide S. No. 90 of Schedule I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and hence the applicable rate of tax is 5%. 6.15 The Appellant understands that an Advance Ruling passed for an assessee is binding only on that assessee and does not have a binding force on other assesse. However, the same has been relied upon by the Appellant only to reiterate the fact that where the oil is manufactured out of vegetable oils and whether or not it is chemically modified, the same merits classification under Schedule-I under tariff heading 1518. The Appellant submits that the product manufactured by the Appellant which is known by the name Pooja oil is also a similar kind of product, which is manufactured by mixing various vegetable oils (like rice bran oil. sesame oil etc.) in appropriate quantities. The product Pooja oil does not contain any animal fats/oils in any quantity. 6.16. They contended that the impugned order has erred in concluding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Customs Tariff was split into two parts in Schedule I and Schedule II; that the entry Sl.No 90 of Schedule I pertains to vegetable oils and entry 27 of Schedule II covers all animal fats and oils: that the entry 90 of Schedule I includes even inedible vegetable oils; that if the intention was to cover only edible oils in entry Sl.No 90 of Schedule I then the same would have been specifically mentioned in the entry. 7.1. Shri. T.R. Venkateswaran also filed additional submissions to the grounds of appeal wherein they contended that the finding in the impugned order that the resultant product should remain edible despite undergoing the processes mentioned in the said entry Sl.No 90, lacks merit; that a plain reading of the entry Sl.No 90 does not envisage any such restriction /condition in the said entry. 7.2. The submitted that the Customs Tariff entry 1518 has been split into two entries (at the 4-digit level). As a result, under GST, items constituting of vegetable fats and oils, which are classifiable under entry 1518 00 39 of the Customs Tariff can be classified under two different entries (Sl.No 90 of Schedule I and Sl.No 27 of Schedule II) which has resulted in an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l first determine the classification of the product Pooja Oil . As mentioned above, the Pooja Oil is a mixture of five different vegetable oils blended with a fragrance. Vegetable Oils and fats and their fractions are classified under Chapter 15 of the Customs Tariff. The Chapter 15 of the Customs Tariff also covers within its purview animal fats and oils and their fractions, animal or vegetable waxes. 11. The different tariff entries of Chapter 15 of the Customs Tariff relating to Animal and Vegetable oils and fats are summarized here below: Chapter Headings 15.01 to 15.06: - Covers different types of animal fats and oils and their fractions. Chapter Headings 15.07 to 15.15 -Covers the single (i.e., not mixed with fats or oils of another nature), fixed vegetable fats and oils mentioned in the headings, together with their fractions, whether or not refined, but not chemically modified. Chapter Heading 15.16 - Covers vegetable fats and oils and their fractions which have undergone a specific chemical transformation such as partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinised, but not further prepared. Chapter Heading 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- Lin seed oil: 151800 11 ----Edible grade 1518 00 18 ---- Other ---Castor Oil. dehydrated: 15180021 ---- Edible grade 1518 00 29 ---- Other --- Other Vegetable oils and its fats: 15180031 ---- Edible grade 1518 00 39 ---- Other 151800 40 --- Other 14. As can be seen from the above, there are two categories of products which are covered under Heading 1518: One category covers vegetable fats and oils and their fractions, boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516. The second category covers inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this Chapter, not else ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts of maleic anhydride at a temperature of 200 C or more, in conjunction with sufficient polyhydric alcohol to esterify the extra acid groups. Maleic oils so obtained have good drying properties. (b) Drying oils (such as linseed oil) to which have been added in the cold small quantities of driers (e.g., lead borate, zinc naphthenate, cobalt resinate) to increase their drying properties. These oils are used in the place of boiled oils, in the preparation of varnishes or paints. They are very different from the prepared liquid driers of heading 32.11 (which are concentrated solutions of driers) and must not be confused with those products. (c) Epoxidised oils obtained by treating, for example, soya-bean oil with peracetic acid preformed or formed in situ by reaction between hydrogen peroxide and acetic acid in the presence of a catalyst. They are used as plasticisers or stabilisers for. e.g., vinyl resins. (d) Brominated oils used as an emulsion or suspension stabiliser for essential oils, for example, in the pharmaceutical industry. 16. From the above reading of the HSN Explanatory Notes, it is evident that the first part of Heading 15.18 pertains to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluded that Pooja Oil is classifiable under sub-heading 1518 00 40 of the Customs Tariff as inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this Chapter, not elsewhere specified or included, let us now determine the GST rate in terms of Notification No 01/2017 CT (R)/IT (R) dt 28.06.2017 as amended. The said Notifications specifies two different entries for tariff heading 1518 in Schedule I and Schedule II. At the risk of repetition, we reproduce the relevant entries of the Schedule I and Schedule II: Schedule I - 2.5%CGST/5% IGST SI. No. Chapter / Heading / Sub-heading / Tariff item Description of Goods 90. 1518 Vegetable fats and oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516 Schedule II - 6% CGST/12% IGST SI. No. Chapter / Heading / Sub-heading / Tariff item Description of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind it necessary to go into the arguments of the Appellant that when a product is classifiable under two or more different tariff heads, the classification which is more beneficial to the assessee is to be adopted. This situation does not arise since the product Pooja oil is held by us to be classifiable only under Chapter subheading 1518 00 40. 22. The Appellant has drawn our attention to the advance ruling given by Andhra Pradesh Advance Ruling Authority in the case of M/s Agarwal Industries Pvt Ltd = 2018 (9) TMI 973 - AUTHORITY FOR ADVANCE RULING - ANDHRA PRADESH to buttress their argument that the Pooja Oil is covered under entry Sl.No 90 of Schedule I. We have gone through the said ruling dated 08.06.2018. However, we are not inclined to consider the same for the reason that primarily, the advance ruling orders are binding only on the applicant who has sought the advance ruling and on the concerned officer or the jurisdictional officer in respect of the applicant. Notwithstanding the above fact, we find that the said authority has given a ruling on the classification and GST rate applicable to the product Energy-G premium Oil . The product in question has been clas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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