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

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 + 2.5% CGST). Despite arguments for exemption based on its use as cattle feed, the authority determined that Maize Bran, being a supplement, does not qualify for exemption under Sr. No. 102 of Notification No. 02/2017-CT (Rate). The classification is based on the Customs Tariff Act and specific GST notifications, leading to the imposition of the 5% GST rate on Maize Bran.

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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).

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