AAR ruling: MIDEL eN 1204 & MIDEL eN 1215 classified under Tariff Heading 1518, subject to 6% GST.

The Authority for Advance Ruling (AAR) determined that the products MIDEL eN 1204 and MIDEL eN 1215, as dielectric transformer fluids, are inedible preparations of vegetable oils falling under Tariff Heading 1518, classified under Entry 27 of Schedule II. Consequently, they are subject to a GST rate of 6% each for Central Goods and Services Tax and Maharashtra Goods and Services Tax.

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Issues Involved:
1. Classification of MIDEL eN 1204 and MIDEL eN 1215 under the Harmonized System of Nomenclature (HSN).
2. Determination of the applicable GST rate for MIDEL eN 1204 and MIDEL eN 1215.

Detailed Analysis:

1. Classification of MIDEL eN 1204 and MIDEL eN 1215 under HSN:

The applicant, M&I Materials India Pvt. Ltd., sought an advance ruling on the classification of their products MIDEL eN 1204 (rapeseed oil-based dielectric transformer fluid) and MIDEL eN 1215 (soya oil-based dielectric transformer fluid). They argued that these products should be classified under HSN code 15180039, which pertains to chemically modified vegetable oils, and should fall under Entry at S. No. 90 of Schedule I of Notification No. 1/2017-Central Tax (Rate), attracting a GST rate of 2.5%.

The applicant contended that:
- The products are chemically modified vegetable oils, more specifically covered under Entry at S. No. 90 of Schedule I.
- The intention of the legislature and GST Council was to tax vegetable fats and oils at a lower rate of 2.5%.
- Even if not classified under Entry at S. No. 90, the products should fall under Entry at S. No. 88 of Schedule I, which covers vegetable fats and oils that are partly or wholly hydrogenated, inter-esterified, re-esterified, or elaidinised.

The jurisdictional officer, however, argued that the products are inedible mixtures or preparations of vegetable oils, thus falling under Entry at S. No. 27 of Schedule II, attracting a GST rate of 6%.

2. Determination of the applicable GST rate for MIDEL eN 1204 and MIDEL eN 1215:

Upon examining the facts, the Authority for Advance Ruling (AAR) observed:
- The products are distinct as dielectric transformer fluids and are not merely vegetable fats or oils.
- The products are described as blends of natural triglyceride esters with performance-enhancing additives, making them inedible preparations.
- The products do not retain their original fundamental structure as vegetable oils due to the addition of additives and the manufacturing process.

The AAR concluded that:
- The products do not fall under Entry 88 or 90 of Schedule I (2.5% GST rate) as they are not merely vegetable fats or oils.
- The products are inedible preparations of vegetable oils, fitting the description under Entry 27 of Schedule II (6% GST rate).

Order:

The AAR ruled that MIDEL eN 1204 and MIDEL eN 1215 fall under Tariff Heading 1518, classified under Entry 27 of Schedule II of Notification No. 1/2017-Central/State Tax (Rate). Therefore, they attract a GST rate of 6% each for Central Goods and Services Tax and Maharashtra Goods and Services Tax.

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