TMI Blog2021 (12) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... are poultry meal made from chicken wastages etc. Thus, we find that the appropriate classification is under Tariff Item 2301 10 10 covering Meat meals and pellets and not under Tariff Item 2301 10 90 -'Other'. Since 'meat meal' finds a specific mention in 2301 10 10 they will merit classification under this heading as opposed to 2301 10 90 which is a generic entry. Therefore, the lower Authority's ruling to this extent, merits to be modified in accordance with Section 101 (1) of the GST Act. 2017 which specifically empowers modification of the ruling appealed against. The classification of the product Poultry Meal is concerned, it is held that the same falls under Heading 2301 of the Customs Tariff (applicable for GST purposes) and in particular, under Tariff Item No. 2301 10 10. Whether the poultry meal is covered by the exemption entry SI.No. 102 of Notification No.2/2017-C.T. (Rate) dated 28.06.2017 as claimed by the appellant or not? - HELD THAT:- The entry refers to both the classification i.e.. Chapter Heading / Subheading / Tariff Item and also specified description, in Col. (2) (3) respectively. The impugned goods viz., 'Poultry meal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der-in-Appeal passed - Regarding. 1. The subject appeal has been filed under Section 100 (1) of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as TGST Act, 20 or the Act , in short) by M/s. Sushi Pet Nutri science, Plot No.1 2, No. 2-10-26/3, Sri Sai Surya Enclave, Machabollarum, Secunderabad having GSTIN No. 36ABWFS7447NIZZ (hereinafter referred in short as M/s. Sushi or the appellant ) against the Order No.04/2020 dated 24.06.2020 ( impugned order ) passed by the Telangana State Authority for Advance Ruling (Goods and Services Tax) ( Advance Ruling Authority / AAR / lower Authority ) in respect of an application filed by the appellant seeking Advance Ruling with regard to HSN Codes and rate of tax in respect of (i) Poultry meal (ii) Poultry Fat manufactured and supplied by them. 2. Vide the impugned order, the Advance Ruling Authority had given the following advance rulings:- 1. The product poultry meal' is classifiable under Chapter Sub Heading No. 2301 10 90 of the first schedule to the Customs Tariff Act, 1975 and the supply of the same attracts GST rate of 5% (2.5% CGST + 2.5% SGST) under Sl.No. 103 of the Schedule-I of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t contains Minerals, proteins and amino acids and is used as one of the raw ingredients by animal/aqua feed manufacturers. It is not fit for human consumption. (iv) The fat oil collected in above process is filtered and further processed till emergence of final product i.e poultry fat, which is in liquid state and reddish yellow in color; this is used as one of the raw ingredients by animal/aqua feed manufacturers and it is not fit for human consumption. (There is no dispute on classification / rate of tax on this Poultry fat). (v) After processing waste materials such as chicken heads, legs, intestine etc., they lose their essential characteristics of original material and a new product emerges in powder form, (vi) In respect of poultry meal their major customers are aqua/poultry/animal feed manufacturers viz.,- (i) M/s Mars International India Private Limited. (ii) M/s NG Feeds Private Limited. (iii) M/s ABIS Exports India Private Limited. (iv) M/s Kwality Feeds Limited. 4.2. With the above background, the applicant had sought for ruling with regard to the HSN codes and the rate of tax in respect of poultry meal . 4.3. The appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18% of dry matter including most fresh and dried for ages and fodders. Concentrates maybe high in energy referred to as energy concentrates such as cereals and milling by products, or high in protein, with over 20% crude protein referred to as protein concentrates. Concentrates may be fed in raw or milled forms as individual feeds (sometimes referred to as straights) or maybe blended or formulated into balance ratios for particular production purposes. 4.4. They further stated that the process of manufacture of 'poultry meal' is similar to the description under Explanatory notes to Chapter 23 which reads as Heading 2309 includes products of a kind used in animal feeding, not elsewhere specified nr included, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, other than vegetable waste, vegetable residues and by- products of such processing. 4.5. The appellant has been selling poultry feed as 'animal feed supplement' under HSN Code 2309 90 20 at NIL rate of duty under GST Act, 2017 since it is exempt under Entry 102 of Notification 2/2017 (Central Tax-Rate) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in further manufacture of animal feed, that does not imply that poultry meal itself is not animal feed or concentrate for compound animal feed. The AAR could not appreciate the basic aspect that, like humans, animals need a balance of nutrients, protein and fibre in their meal Poultry meal can undeniably be administered directly to animals but that would only satiate the growth and protein needs of the animals and not aid in digestion. Therefore, for a wholesome process of digestion and nutrition, the concentrate of proteins and amino acids which is in poultry meal needs to be compounded with other fibres before being given as feed to animals. Merely because a product is capable of being used as a raw material, it does not imply that it cannot be classified under entries which otherwise accurately cover them. (vi) The AAR failed to appreciate that the inclusion of 2309 90 20 i.e. Concentrates for compound animal feed would itself be redundant if the main Heading is interpreted as done by the AAR i.e. products directly fed to animals. Compound animal feed is the feed that is blended from various nutrient sources and additives so that feed with specific requirements is obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAR erred in brushing aside the decision relied upon by the appellant in case of M/s. Supreme Suguna Foods Company Limited (2015 316 ELT 341 Tri. Chennai). The Tribunal had found that high protein poultry mash is classifiable as a preparation of a kind used in animal feeding. The poultry meal that is the subject matter of the question before the AAR is similar in nature to the high protein poultry mash. Since poultry meal is a concentrate tor compounded animal feed falling under Chapter-2309, the heading of which is preparations of a kind used in animal feeding, the decision of CESTAT is in favour of the Petitioner and ought to have been applied by the AAR. (x) The AAR's error in judgment is evident from a reading of Entry 102 of Notification No.2/2017 dated 28.06.2017 itself. Entry 102 contemplates that supplements, husks, concentrates and additives are included within the meaning of aquatic, poultry and cattle feed. If the interpretation of the AAR is accepted, the inclusion of concentrates within the scope of feed would be erroneous since concentrates, being what they are, are difficult to be digested when fed directly. To aid the digestion of the same, the concentrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified above and the essential characteristics of original waste material is lost totally, the product is in powder form and in the form of concentrate which has to be mixed with starch and other feed items etc. For feeding to the animal. He submitted that Heading 2309 9020 covers concentrates for compound animal feed' and therefore, their product falls under this head and is straightaway exempt under entry no. 102 of notification no. 2/2017-Central Tax (Rate) dated 28.06.2017 which covers 'aquatic feed grass, hay straw, supplement husk of pulses, concentrates additives wheat bran de oiled cake'. The Advance Ruling Authority has erred in holding that the product is not directly fed to the animals but is a raw material of animal feed and therefore not eligible for the benefit of exemption Whereas the product is covered by Heading 2309 which applies to 'Preparations of a kind used in animal feeding', which is also supported by Hon'ble Tribunal's judgment. The Authority however has not relied upon the judgment of the Tribunal. 5.3. The learned Advocate further stated that the Advance Ruling Authority has referred to Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General Explanatory Notes. 9.1 The relevant entries under Heading 2301 and 2309 of the customs tariff read as follows:- Heading 2301: Tariff Item Description of goods 2301 Flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption; greaves 2301 10 - Flours, meals and pellets, of meal or meat offal; greaves 2301 10 10 --- Meat meals and pellets (including tankage) 2301 1090 --- Others (including greaves) 2301 20 - flours, meats and pellets, offish or of crustaceans Heading 2309: Tariff Item Description of goods 2309 Preparations of a kind used in animal feeding 2309 10 00 - Dog or cat food, put up for retail sale 2309 90 -Other: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie classifiable under two or more headings classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or mode up of different components, and goods put up in sets for retail sale, which cannot he classified by reference to (a). shall he classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable (c) When goods cannot he classified by reference to (a) or (b), they shall he classified under the heading which occurs last in numerical order among those which equally merit consideration 4. Goods which cannot be classified in accordance with the above rules sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al . The process of manufacture described by the appellant is similar, rather identical to the process described in the HSN explanatory notes under heading 2301. 10.2 With regard to the appellants claim for classifying the impugned goods as concentrates falling under Heading 2309 of the Custom Tariff, we find the same is legally untenable due to the following reasoning. 10.3 In order to fall under Heading 2309, the goods should be preparations of a kind used in animal feeding . Considering the said specific phrase used as the terms of the heading and also considering the said various types of goods mentioned thereunder i.e. Dog or cat food in retail form, compound animal feed fish, prawn feed etc.. And also taking into account the HSN explanatory Notes for the heading 2309 supra, it is evident that the said heading is applicable to finished products which are as such fed to the animals. To further elaborate, the Heading contains the wording as ..used in animal feeding'' and not as ..used in animal feed(s) . The phrase 'used in animal feeding' has a distinct connotation to denote goods which are fed to animals in a ready to eat condition, whereas the latter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore not acceptable. 10.6. It is further observed that in terms of the Chapter Note to Ch. 23 in the Customs Tariff, as referred supra, the products under heading 2309 includes those which are processed to such an extent that the essential characteristics of the original material is lost. The HSN Notes elaborate on this aspect showing that the extent of processing should be that the characteristics cellular structure of the original vegetable material is no longer recognizable under a microscope. The appellants have laid much emphasis that the process of manufacture of poultry meal is the same as mentioned in the Chapter note, whereby the characteristics of the chicken legs, intestines etc., are lost and a totally new product emerges in the powder form. As per the description of manufacturing process given by the appellants, the poultry meal emerges from sequence of cooking, separation of fat, pressing and sieving: which are plain physical processes whereby it cannot be said that the essential characteristic of original material is lost. This position will also not change by addition of anti-oxidants, which is only to prevent the oxidation leading to decay/degeneration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residues and wastes arises during the process of manufacture of final product from food industry The clearance of residues und wastes above would he Nil rate of duty under Heading No. 23.01. The other Heading No. 23 02 covers preparation of a kind used in animal feeding There is no dispute that heading 23 02 of CETA corresponds to Heading No. 23 09 of CTA. ... 11.3 Thus, in the above case law, the Heading 2301 of Central Excise Tariff which was considered by the Hon'ble Tribunal covered Residues and waste from food industries, including bagasse, other waste of sugar manufacture and oil cakes''. The same is not at all comparable with the situation in the instant case wherein the Heading 2301 of Customs Tariff covers Flours, meals and pellets.....of meat and meat offal... . Hence, the above case law is clearly distinguishable on the facts and context of statutory text / classification entries involved, whereby it cannot be said to be a binding precedent to be applied to the present case. Accordingly, we find the appellant's arguments in this regard to be legally not tenable. 12. Further, in terms of Rule 1 of the Interpretative Rules, the terms of the headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant has claimed the exemption on the basis of their contention that the poultry meals is classifiable as 'concentrates', which is appearing in the exemption entry. We have already examined the said claim and negated the same vide our findings and discussion, supra. The same holds good and applies in this context also. 15.4 The appellant has also put forth other contentions in this regard i.e. the lower authority has referred to the Hon'ble Supreme Court judgment in the case of Dilip Kumar Company, which is not at all applicable nor relevant; the lower authority erred in relying upon a TRU-Circular which does not have statutory backing etc. We find that these contentions do not have any bearing vis-a-vis the issue of eligibility to an exemption Notification. Even otherwise, we find that the reference to the Hon'ble Supreme Court judgment in Dilip Kumar Co., finds mention in the TRU Circular dated 31.12.2018. It has been further held in a catena of judgments that TRU Circulars however have persuasive value and aid in interpreting the scope / text of Notification-entries etc. being contemporaneous exponentio. Reliance in this regard is placed on S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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