TMI Blog2019 (3) TMI 1867X X X X Extracts X X X X X X X X Extracts X X X X ..... lventising 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an ingredient of Cattle Feed, Poultry Feed and other animal feeds. b) Whether the applicant is eligible to get entire tax input credit of GST paid on purchase of Mahua Oil Cake/Rice Bran Oil cake used in the manufacture of solvent extracted oil? Ans . - The Input credit of GST paid on purchase of Mahua Oil Cake/Rice Bran Oil cake used in the manufacture of solvent extracted oil is partially allowed as per process/formula prescribed in the Chapter V (INPUT TAX CREDIT) of GST Rule,2017, because, the applicant manufacturing both taxable and exempted goods by using raw materials viz. Mahua De-oiled cake and De-oiled Rice Bran. Further, if common inputs are used for both taxable and exempted supplies, the applicant is required to reverse the credit proportional to the amount of credit pertaining to the exempted supplies immediately. 3. Being aggrieved with the Order no. 06 dated 25.05.2018, M/s. Indo Prosoya Foods (P) Ltd., 54/10, 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 Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We observe that the issues placed before the Appellate Authority for advance ruling are:- (i) Whether de- oiled mahua cake would merit classification under chapter 23069011 of the CGST Tariff or under the head 23069090 of the Tariff. (ii) Whether in the first round of issue placed before the authority the chapter note to Chapter 23 of the GST Tariff shall have an overriding effect for exclusion of Mahua de-oiled cake from Chapter 2309. (iii) Whether the Mahua De-oiled cake is an unintended generated waste/solid residues arising due to technical necessity. (iv) Whether the product falling under the specific entry, can it be over-ridden 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. 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. 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. Hon'ble Supreme Court, in the case of Commissioner of Central Excise vs. Goyal Proteins Ltd. [2017 (355) ELT A27 S.C.] has maintained the order of Hon'ble High Court, Rajstahan upholding the decision by Hon'ble CESTAT of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forms of supply of goods and/or services such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed, to be made for a consideration by a person in the course or furtherance of business. Schedule I specified the supply. The word Supply replaces the operative term sale . Thus, no scope has been left for any confusion and the definition includes every term which is in any form liable to be termed as sale. Even the supply which is made or 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. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to deny the proper percentage and consign the product to the residuary item. Before, we proceed further we come to chapter 23.06 which reads as under- Oil-cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extraction of vegetable fats or oils, other than those of heading 2304 or 2305 [other than cotton seed oil cake] 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. 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-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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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