Appellate Authority affirms 12% GST rate on "Pooja Oil" as inedible mixture

The Appellate Authority upheld the decision of the Authority for Advance Ruling, classifying "Pooja Oil" as an inedible mixture of vegetable oils under sub-heading 1518 00 40, subject to a 12% GST rate. The appeal by the Appellant was dismissed, affirming the taxable status of the product at the higher rate.

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Issues Involved:
1. Classification of "Pooja Oil" under tariff heading 1518.
2. Determination of applicable GST rate for "Pooja Oil".

Issue-Wise Detailed Analysis:

1. Classification of "Pooja Oil" under tariff heading 1518:

The Appellant, a wholesale dealer in edible oil, manufactures "Pooja Oil," a mixture of rice bran oil, sesame oil, coconut oil, castor oil, and mahua oil, with added fragrance. The core issue is whether "Pooja Oil" should be classified under tariff item 1518 of Schedule-I (taxable at 5%) or Schedule-II (taxable at 12%) of Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017.

The Appellant argued that Chapter Heading 1518 covers vegetable fats and oils, whether or not chemically modified, and does not distinguish between edible and inedible oils. They contended that since "Pooja Oil" is made from vegetable oils, it should be classified under the more specific entry in Schedule-I.

The Authority for Advance Ruling (AAR) classified "Pooja Oil" under entry number 27 of Schedule-II, as an inedible mixture of vegetable oils, thus taxable at 12%. The Appellant challenged this, asserting that the product should fall under Schedule-I, emphasizing that the entry does not specify that oils must be edible to qualify.

Upon review, it was determined that "Pooja Oil," being a mixture of five different vegetable oils blended with fragrance, does not undergo chemical modification processes like boiling, oxidization, dehydration, etc., specified in entry 90 of Schedule-I. Therefore, it does not fit under the sub-heading 1518 00 39. Instead, it is classifiable under sub-heading 1518 00 40 as an inedible mixture of vegetable oils not specified elsewhere in Chapter 15.

2. Determination of applicable GST rate for "Pooja Oil":

The applicable GST rate depends on the classification under Schedule-I or Schedule-II. Entry 90 of Schedule-I covers vegetable fats and oils that have undergone specific processes, while entry 27 of Schedule-II includes inedible mixtures of vegetable fats or oils not specified elsewhere.

The Appellate Authority concluded that "Pooja Oil" is an inedible mixture of vegetable oils and is not covered under entry 90 of Schedule-I. Instead, it falls under entry 27 of Schedule-II, making it taxable at 12% GST (6% CGST and 6% KGST).

The Appellant's reliance on Rule 3(a) of the General Rules of Interpretation and various judicial precedents to argue for a more beneficial classification was deemed unnecessary, as the product was conclusively classified under sub-heading 1518 00 40.

The reference to the Andhra Pradesh Advance Ruling in the case of M/s Agarwal Industries Pvt Ltd was not persuasive, as it did not detail the manufacturing process of the product in question.

Conclusion:

The Appellate Authority upheld the AAR's decision, confirming that "Pooja Oil" is classifiable under sub-heading 1518 00 40 and taxable at 12% GST. The appeal filed by the Appellant was dismissed on all counts.

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