2020 (8) TMI 102 - AAR - GST

Classification of 'Poultry Meal' and 'Poultry Fat' for GST: Key Sub-Heading Details and Tax Rates

The Authority classified 'poultry meal' under Chapter Sub-Heading No. 2301 10 90, subject to a 5% GST rate. 'Poultry fat' was classified under Chapter ... Classification of goods by tariff heading - Loss of essential characteristics by processing - Distinction between animal feed and raw material/inputs for animal feed - Interpretation of Chapter and Section Notes of the Customs Tariff - Exemption notification applicability to feeds versus inputs - Applicable GST rate as per rate notifications read with tariff classificationClassification of goods by tariff heading - Loss of essential characteristics by processing - Distinction between animal feed and raw material/inputs for animal feed - Interpretation of Chapter and Section Notes of the Customs Tariff - Applicable GST rate as per rate notifications read with tariff classification - HSN classification and GST rate applicable to the product 'poultry meal' manufactured by the applicant - HELD THAT: - The Authority examined the manufacturing process and observed that chicken wastages are cooked, dried and powdered, producing a product used as an input by animal/aqua feed manufacturers. Chapter Note to Chapter 23 requires that goods obtained by processing animal materials to such an extent that they have lost the essential characteristics of the original material may fall in Chapter 2309, but the Authority found that the applicant's product is a flour/meal of meat offal and is appropriately classifiable under Chapter Heading 2301, specifically sub-heading 2301 10 90 (others). The Authority distinguished between finished animal feed and raw materials/inputs for feed, relying on the Larger Bench holding that inputs for animal feed are different from animal feed, and held that the product is not covered by the exemption entry for feeds. Having classified the product under 2301 10 90, the Authority held that the supply attracts GST at 5% (2.5% CGST + 2.5% SGST) as per the rate notification schedule applicable to that tariff entry. [Paras 8]The product 'poultry meal' is classifiable under Chapter Sub Heading 2301 10 90 and attracts GST at 5% (2.5% CGST + 2.5% SGST).Classification of goods by tariff heading - By product classification - Applicable GST rate as per rate notifications read with tariff classification - HSN classification and GST rate applicable to the product 'poultry fat' supplied by the applicant - HELD THAT: - The Authority noted that 'poultry fat' emerges as a by product during processing. The Tariff contains entries for fats not rendered (heading 0209) and for rendered/extracted fats (heading 1501). Given that the applicant supplies rendered/extracted poultry fat obtained during manufacture, the product is classifiable under Chapter Sub Heading 1501 90 00. Under the rate notification schedule, poultry fat so classified attracts GST at 12% (6% CGST + 6% SGST/UTGST). [Paras 8]The product 'poultry fat' is classifiable under Chapter Sub Heading 1501 90 00 and attracts GST at 12% (6% CGST + 6% SGST/UTGST).Final Conclusion: Advance Ruling: 'Poultry meal' is classifiable under Chapter Sub Heading 2301 10 90 and taxable at 5% (2.5% CGST + 2.5% SGST); 'Poultry fat' is classifiable under Chapter Sub Heading 1501 90 00 and taxable at 12% (6% CGST + 6% SGST/UTGST). Issues Involved:1. HSN Code and rate of tax for the supply of 'poultry meal'.2. HSN Code and rate of tax for the supply of 'poultry fat'.Issue-wise Detailed Analysis:1. HSN Code and Rate of Tax for 'Poultry Meal':The applicant, M/s. Sushi Pet Nutrisciences, sought an advance ruling on the classification and tax rate applicable to 'poultry meal'. They initially classified 'poultry meal' under HSN Code 2309 9020, claiming it as a concentrate for animal feed, attracting a 'nil' rate of tax.Upon review, the Authority noted that 'poultry meal' is manufactured from chicken waste (legs, heads, intestines, feathers, etc.) through a process involving cooking, drying, and powdering. The final product is used as a raw material in animal feed production. The Authority referred to Chapter Note 23 of the Customs Tariff Act, 1975, which includes products used in animal feeding that have lost the essential characteristics of the original material.The Authority concluded that 'poultry meal' is not a finished animal feed but a raw material for it. Consequently, it cannot be classified under Chapter Heading No. 2309. Instead, it falls under Chapter Heading No. 2301, specifically sub-heading 2301 10 90, which covers 'Flours, meals, and pellets, of meat or meat offal; greaves.'The Authority also referred to Exemption Notification No. 2/2017-CT (Rate) dated 28.06.2017, which exempts certain feeds under Chapter Heading Nos. 2301, 2302, 2308, and 2309. However, since 'poultry meal' is not a finished feed but a raw material, it is not exempted. It attracts a GST rate of 5% (2.5% CGST + 2.5% SGST) under Sl. No. 103 of Schedule-1 of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).2. HSN Code and Rate of Tax for 'Poultry Fat':The applicant classified 'poultry fat' under HSN Code 1501 9000, attracting a 12% tax rate (6% CGST + 6% SGST/UTGST). The Authority reviewed the classification and noted that 'poultry fat' is a by-product obtained during the processing of chicken remnants for 'poultry meal'.The Customs Tariff Schedule has two relevant entries for 'poultry fat': Tariff Heading No. 0209 (covering poultry fat not rendered or otherwise extracted) and Tariff Heading No. 1501 (covering poultry fat other than that of Heading No. 0209). Since the applicant's 'poultry fat' is extracted as a by-product, it falls under Tariff item No. 1501 90 00.The Authority confirmed that 'poultry fat' attracts a 12% GST rate (6% CGST + 6% SGST/UTGST) as per entry No. 19 of Schedule-II of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).Advance Ruling: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 attracts a GST rate of 5% (2.5% CGST + 2.5% SGST) under Sl. No. 103 of Schedule-1 of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).2. The product 'poultry fat' is classifiable under Chapter Sub-Heading No. 1501 90 00 of the first schedule to the Customs Tariff Act, 1975, and attracts a 12% GST rate (6% CGST + 6% SGST/UTGST) as per entry No. 19 of Schedule-II of Notification No. 01/2017-CT (R) dated 28.06.2017 (as amended).