2025 (8) TMI 549 - AAR - GST

Cattle Feed Under Heading 2302.10 Exempt from GST if Used Directly, Not as Ingredient per Notification 2/2017

The AAR, Karnataka held that cattle feed classified under heading 2302.10 and supplied for direct consumption by animals is exempt from GST under ... Exemption from GST - “Cattle feed”, intended to supply for directly feeding to animal (i.e. supply to end user as Cattle Feed/Direct consumption as Cattle Feed) - exempt supply vide S. No. 102 of N/N. 2/2017-Central tax (Rate) dated 28-06-2017 or not - supply of the product “cattle feed”, which is ready for direct consumption as cattle feed, but used as an ingredient for higher nutritive value is also exempted supply under the Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, as amended or not - Documents required to be obtained from the customers as a proof for claiming Exemption with respect to said supply of our proposed Cattle feed product used for feeding the Cattle. Exempt supply or not - HELD THAT:- In the instant case the applicant manufactures their product “Cattle feed”, out of corn, admittedly, classified the same under heading 2302.10. It could be seen from para 13 supra that the product “Cattle feed”, falling under 2302, is exempted in terms of SI.No. 102 of the Schedule I to the Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, as amended. Thus the impugned product of the applicant i.e. “Cattle feed”, meant for direct consumption as cattle feed i.e. when it is exclusively used as cattle feed for directly feeding the cattle, is eligible for exemption in terms of SI.No. 102. Whether the said supply of the product “cattle feed”, which is ready for direct consumption as cattle feed, but used as an ingredient for higher nutritive value is also exempted supply under the Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, as amended? - HELD THAT:- It could be seen from para 13 that the exemption is applicable only in respect of the goods “Cattle feed” i.e. the exemption would be applicable as long as the final product is supplied as cattle feed and utilized directly to feed the cattle. In the instant situation, the impugned product by name “Cattle feed” is not used directly to feed the cattle but as an ingredient to manufacture a new product with higher nutritive value and thereby loses the nature of cattle feed. Thus the exemption mentioned supra is not applicable to such situations. Documents required to be obtained from the customers as a proof for claiming Exemption with respect to said supply of our proposed Cattle feed product used for feeding the Cattle - HELD THAT:- Reference invited to Section 97(2) of the CGST Act 2017, which specifies certain issues on which the applicant can raise the questions and seek advance rulings. The above question raised by the applicant is not covered under any of the specified issues and hence is beyond the jurisdiction of this Authority and thereby this Authority refrains from passing any ruling in this regard. ISSUES: Whether the supply of unspecified particles from the corn processing, further milled and marketed as cattle feed for direct feeding to animals, qualifies as an exempt supply under S. No. 102 of Notification No. 2/2017-Central Tax (Rate) dated 28-06-2017.Whether the supply of cattle feed, which is ready for direct consumption but used as an ingredient by customers for further processing to enhance nutritive value, is also exempt under the same notification.What documents are required to be obtained from customers as proof for claiming exemption on supply of cattle feed products. RULINGS / HOLDINGS: The supply of the product marketed as cattle feed, supplied for direct feeding to animals (i.e., supply to end user as cattle feed/direct consumption), is eligible for exemption under S. No. 102 of Notification No. 2/2017-Central Tax (Rate) dated 28-06-2017.The supply of cattle feed that is ready for direct consumption but used as an ingredient for higher nutritive value is not eligible for exemption under the said notification.The question regarding documents required from customers as proof for claiming exemption is beyond the jurisdiction of the Authority under Section 97(2) of the CGST Act, 2017; hence, no ruling is given. RATIONALE: The Authority applied the provisions of the CGST Act, 2017 and KGST Act, 2017, along with the relevant notifications: Notification No. 2/2017-Central Tax (Rate) dated 28-06-2017 (exemption notification) and Notification No. 1/2017-Central Tax (Rate) dated 28-06-2017 (rate notification), particularly S. No. 102 and S. No. 103A.The classification of the product under tariff heading 2302.10 (bran, sharps and other residues derived from milling of cereals) was examined, with reference to the Customs Tariff Act, 1975 and Harmonised Commodity Description and Coding System (HSN) explanatory notes.The Authority noted the absence of starch and ash content data required under Note 2(A) to Chapter 11 for classification but proceeded on the assumption that the product merits classification under 2302.10.It was observed that S. No. 102 of the exemption notification includes cattle feed without conditions or restrictions, and there is no express exclusion for cattle feed used as raw material for further processing.Reliance was placed on judicial precedents interpreting 'cattle feed' and exemption notifications, including the principle that exemption notifications are to be construed strictly at first but liberally once applicability is established.The Authority distinguished between cattle feed supplied for direct feeding and cattle feed used as an ingredient for further manufacture, holding that exemption applies only to the former, consistent with Circular No. 179/11/2022-GST dated 03.08.2022.The Authority emphasized that subsequent circulars cannot impose new conditions or restrict the scope of exemption notifications beyond their plain language, citing Supreme Court decisions.The end use of goods is generally irrelevant for exemption unless explicitly stated in the notification; thus, exemption depends on the nature of the goods supplied, not their use by the recipient.The Authority refrained from ruling on documentary requirements as such questions fall outside the scope of advance rulings under Section 97(2) of the CGST Act.