2020 (9) TMI 688 - AAR - GST

Classification of Maize Bran for GST at 5% rate upheld despite cattle feed use

In Re : M/s Sayaji Industries Ltd.

The product 'Maize Bran' is classified under Entry Sr. No. 103A of Notification No. 01/2017-Central Tax (Rate), subject to a GST rate of 5% (2.5% SGST + ... Classification of goods - Maize Bran (cattle feed) - chargeable to CGST @2.5% under Sl. No. 103 A of N/N. 01/2017-CT (Rate) or Chargeable to NIL rate as per Sl. No. 102 of N/N. 02/2017? - HELD THAT:- Maize Bran is used as a major supplement for cattle feed. The word ‘supplement’ is defined in dictionary as “a thing added to something else in order to complete or enhance it.” Therefore, Maize Bran is a product which is added to cattle feed to complete it or enhance it. This literally means that Maize Bran is not a cattle feed in itself but is added to cattle feed to enhance or improve its quality/nutritional value or to complete it. It is also seen from the submission of the applicant that they are time and again stressing on the fact that the maize bran produced by them is cattle feed and should be rightly classified on the basis of its use and be exempted under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. However, they have failed to clarify as to how the said product can be considered as ‘cattle feed’ when the definition itself says that “it is used as a major supplement for cattle feed. The maize bran supplied by them to the farmers would not be directly fed to cattle but be mixed with the cattle feed before feeding it to the cattle. In view of the above, it can be seen that maize bran in itself is not a cattle feed but is a major ingredient used in the manufacture of cattle feed as submitted by the applicant. Thus, the applicant by themselves have contradicted their contention through their submission. The applicant has supplied 10.9510 tonnes of Wet Bran to Gopal & Co., Kathwada, Gujarat, India. The applicant is classifying their product “Wet Bran” and not as “cattle feed”. It is also seen that ‘Maize Bran’ is specifically mentioned in Sub-heading No.23021010 of the First Schedule to the Custom Tariff Act, 1975 (51 of 1975) and the word ‘Bran’ is specifically mentioned in Sr.No.103A of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. In view of the above, the product ‘maize bran’ does not warrant classification under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) as the product does not classify as ‘cattle feed’ and is correctly classifiable as ‘Bran’ under Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 for the reason that it cannot be considered as a ‘cattle feed’ by definition. The product ‘Maize Bran’ manufactured and supplied by M/s. Sayaji Industries Ltd. is covered under Entry Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which rate of GST chargeable is 5%. Issues Involved:1. Classification of Maize Bran under GST.2. Applicability of GST rate on Maize Bran.3. Eligibility for exemption under specific GST notifications.Detailed Analysis:1. Classification of Maize Bran under GST:The applicant, engaged in the manufacture and supply of Maize Starch and its derivatives, produces Maize Bran as a by-product. The applicant sought to determine whether Maize Bran should be classified under Sl. No. 103A of Notification No. 01/2017-CT (Rate) or under Sl. No. 102 of Notification No. 02/2017-CT (Rate).The applicant contended that Maize Bran, being a by-product of maize processing, is used as cattle feed and should be exempt from GST under Sr. No. 102 of Notification No. 02/2017-CT (Rate). However, the authority analyzed the classification based on the Customs Tariff Act, 1975, which lists Maize Bran under sub-heading 23021010.2. Applicability of GST Rate on Maize Bran:The applicant argued that Maize Bran should be exempt from GST as it is used as cattle feed. The authority examined Notification No. 01/2017-CT (Rate) and found that Maize Bran is specifically mentioned under Tariff item 23021010 and falls under Sr. No. 103A, which imposes a GST rate of 5% (2.5% CGST + 2.5% SGST).The authority noted that while Maize Bran is used as a supplement in cattle feed, it is not cattle feed itself. The definition of Maize Bran and its use as a supplement to enhance cattle feed quality indicates that it should not be classified as cattle feed.3. Eligibility for Exemption under Specific GST Notifications:The applicant referred to several legal precedents to support their claim for exemption, arguing that Maize Bran should be classified based on its use and common parlance. However, the authority concluded that the product must be classified according to its specific mention in the Customs Tariff Act and the applicable GST notifications.The authority found that the product 'Maize Bran' does not qualify for exemption under Sr. No. 102 of Notification No. 02/2017-CT (Rate) as it is not cattle feed but a supplement. The correct classification is under Sr. No. 103A of Notification No. 01/2017-CT (Rate), subjecting it to a GST rate of 5%.Ruling:The product 'Maize Bran' manufactured and supplied by the applicant is covered under Entry Sr. No. 103A of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017, on which the applicable GST rate is 5% (2.5% SGST + 2.5% CGST).