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TMI Blog2018 (10) TMI 1925X X X X Extracts X X X X X X X X Extracts X X X X ..... me provisions under the UPGST Act. Brief Facts of the Case 1. M/s. Khandelwal Extractions Ltd., 51/47, 3rd Floor, Keshwarwani Bhawan, Naya Ganj, Kanpur, Uttar Pradesh-208001 (here in after called the applicant) is a registered assessee under GST having GSTN : 09AAACK5505F1ZS. 2. The Applicant is engaged in the business of purchases of Mahua oil cake / Rice Bran for extraction of oil through solvent extraction Process. 3. The Applicant in his application before the Authority on Advance Ruling (hereinafter referred to as AAR), had raised following issues for determination by the Authority - a) Whether Mahua De-oiled cake/ De-oiled Rice Bran, being used as an ingredient of Cattle Feed, Poultry Feed and other animal feeds is 'Waste generated' during the Solvent Extraction process? 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? 4. During the personal hearing Shri Pawanshree Agrawal and Shri Vaibhav Dixit, Advocates had appeared before the AAR on behalf of the applicant. In the written submission, the applicant, while describing the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the application, the oral and written submissions made at the time of personal hearing, documents produced during the personal hearing and the views submitted by the jurisdictional Officer, CGST and CX, Kanpur, the Authority for Advance Ruling vide their Order 07 dated 25.05.2018 passed the point wise ruling as follows:- a) Whether Mahua De-oiled cake/ De-oiled Rice Bran, being used as an ingredient of Cattle Feed, Poultry Feed and other animal feeds is `Waste generated' during the Solvent Extraction process? Ans. - Mahua De-oiled cake/ De-oiled Rice Bran is a by-product occurred during the Solvent Extraction process, which is used as 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing activity of manufacture of rice bran oil/mahua oil and were in fact technological necessity and therefore were 'waste products' not exigible to GST. The appellant in his 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. At the very outset, we concede the contention of the appellant that the precedence value of the decisions of Higher judicial forum is not lost only on the ground that relevant laws have changed. The principles laid down by the higher judiciary in arriving at a decision must be followed as a matter of judicial discipline, if the broad paramet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia - "Further, depressed demand of de-oiled cakes have changed the industrial scenario altogether. These factors have affected the company's working." 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 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 '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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. Definition of 'supply' Under section 2 (92) read with section 3 'supply' includes 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. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n about de-oiled mahua cake. It is found that these cakes have a very high saponin content which makes them unsuitable for animal or fish feed in general. Rather, these cakes are primarily used in pisciculture (fish cultivation) as weedicides (to kill and eradicate unwanted vegetation growth) and as piseicides (to eradicate predatory fishes) and as fertilizers in agriculture. Its role as fish feed, if any, is very limited as compared to its general use as fertilizer and weedicides. Accordingly, we do not agree with the contention of the appellant regarding its classification under 23099039. In fact the de-oiled mahua cake cannot fall under Chapter 23 of the tariff which comprises "Residues and waste from the food industries; prepared animal fodder". Since, as discussed in the foregoing paragraphs, it is neither a residue nor a waste nor a prepared animal fodder. Thus, there is no specific entry for this item or similar product anywhere in the tariff and therefore it should be classified under the residuary entry serial number 453 of the Notification No. 01/2017-CT(R) dated 28.06.2017 ["Any Chapter-Goods which are not specified in Schedule I, II, IV, V or VI'] having a GST rate of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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