Classification of Soya Husk under GST: Specific HSN Prevails

The ruling determined that Soya Husk resulting from the extraction of Soyabean oil should be classified under HSN heading 2304, attracting a GST rate of 5% as per Entry 105 of Notification No.1/17-Central Tax (Rate) dated 28.06.2017. The specific entry (HSN 2304) prevails over the general entry (HSN 2302), making Soya Husk subject to 5% GST.

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Issues Involved:
1. Classification of Soya Husk resulting from the extraction of Soyabean Oil.
2. Applicability of GST exemption under HSN heading 2302.
3. Determination of correct tariff and rate of tax for Soya Husk under GST.

Detailed Analysis:

Issue 1: Classification of Soya Husk resulting from the extraction of Soyabean Oil
The applicant, M/s Adani Wilmar Limited, engaged in the manufacturing and sale of Soya Oil, sought clarification on the classification of Soya Husk, a by-product obtained during the extraction process. The primary question was whether Soya Husk should be classified under HSN heading 2302 (which exempts it from GST) or under HSN heading 2304 (which attracts 5% GST).

Issue 2: Applicability of GST exemption under HSN heading 2302
The applicant contended that Soya Husk could be classified under HSN heading 2302, which includes “Bran, sharps, and other residues, whether or not in the form of pellets, derived from the sifting, milling, or other working of cereals or of leguminous plants.” This classification would exempt Soya Husk from GST under Entry 102 of Notification No.2/17-Central Tax (Rate) dated 28.06.2017. However, the ruling clarified that as per Circular No.80/54/2018-GST dated 31st December 2018 and the Supreme Court's decision in the Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar (2018-361-E.L.T-577), raw materials/inputs like Soya Husk used in the manufacture of animal feed do not qualify for exemption under Entry 102. Instead, the exemption applies only to the prepared animal feed itself.

Issue 3: Determination of correct tariff and rate of tax for Soya Husk under GST
The ruling emphasized that Soya Husk should be classified under HSN heading 2304, which covers “Oil cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extraction of soyabean oil.” This classification attracts a GST rate of 5% as per Entry 105 of Notification No.1/17-Central Tax (Rate) dated 28.06.2017. The ruling also referred to the Rules of interpretation of HSN code, stating that the specific entry (HSN 2304) prevails over the general entry (HSN 2302) for classification purposes. Therefore, Soya Husk, being a solid residue from the extraction of soyabean oil, falls under HSN 2304 and is subject to 5% GST.

Ruling:
1. Soya Husk resulting from the extraction of Soyabean oil is taxable at 5% under Subheading 2304 as per Entry 105 of Notification No.1/17-Central Tax (Rate) dated 28.06.2017.
2. The ruling confirms that Soya Husk will be covered by specific entry 105 of Schedule I, attracting GST at 5% (2.5% CGST & 2.5% SGST) under Chapter 2304.
3. The ruling is valid subject to the provisions under section 103(2) until and unless declared void under section 104(1) of the GST Act.

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