2021 (10) TMI 147

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....ical or allied industries; that the actual processes undertaken and the resultant product had not been accurately specified and as such, the only option available was to classify the said product in the residual entry of Chapter 38 pertaining to Miscellaneous Chemical Products. 2.2 The GAAR, vide Advance Ruling No. GUJ/GAAR/R/05/2020 dated 17.03.2020 issued the following ruling - " The product Rice Bran (22+Oil) shall be classified under Chapter heading 38259000 and attracts rate 9% CGST and 9% SGST under vide Sr.No.98 of Schedule III of Notification No. 1/2017- Central Tax (Rate) of CGST Act and corresponding notification of SGST Act." 3.1 Aggrieved by the aforesaid ruling, the appellant has filed the present appeal. 3.2 The appellant has submitted that it purchases husk of Poha and Mamra (byproduct generated during manufacturing of Poha and Mamra from paddy) having oil content approximately 5% and different kinds of sludge/wax oil. Both the above products are mixed in a vessel and by centrifugal process, the oil and the rice bran i.e. husk of Poha and Mamra gets separated from the mixture. During this process, the oil content present in the sludge/wax oil gets transferred in....

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....)', and the applicable rate of GST on the said product. CLASSIFICATION OF THE PRODUCT 7.1 The appellant has submitted that it is purchasing Rice Husk of Poha and Mamra(byproduct generated during manufacturing of Poha and Mamra from paddy), which is mixed in a vessel with the sludge / wax oil and the resultant product is termed as 'Rice Bran (22+Oil)'. 7.2 The Explanatory Notes of Harmonised System of Nomenclature (herein after referred to as HSN) for Chapter 23 provides that - "This Chapter covers the various residues and wastes derived from vegetable materials used by food preparing industries, and also certain products of animal origin. The main use of most of these products is as animal feeding stuffs, either alone or mixed with other materials, although some of them are fit for human consumption. Certain products (e.g., wine lees, argol, oil-cake) also have industrial uses." 7.3 The product being supplied by the appellant is obtained by mixing Rice Husk of Poha and Mamra, a byproduct generated during manufacturing of Poha and Mamra from paddy, and Sludge / Wax Oil (Rice Bran Wax / Sunflower Wax Oil). Further, the appellant has submitted that its product can be used as cattl....

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.... to raise the oil content up to 22%. As the main ingredient is the Rice Husk and the other minor ingredient i.e. Sludge / Wax Oil (Rice Bran Wax / Sunflower Wax Oil) is also of rice bran / sunflower origin, the resultant product of the appellant clearly falls under Chapter Heading 2302 and is appropriately classifiable under Tariff Item 2302 40 00 of the CTA, 1975, which covers bran, sharps and other residues - 'of other cereals'. 7.7 In the case of Shri Mukthenahally Shivakumar Channabasavaiah [Advance Ruling No. KAR ADRG 23/2020 dated 23.04.2020], Karnataka Advance Ruling Authority has ruled that the product in that case was classifiable under Tariff Item 2302 40 90 (sic 2302 40 00) of the CTA, 1975, however, the product in the present case is slight different inasmuch as in the present case, sludge / Was Oil is mixed in Rice Husk to raise the oil content to 22%. 8.1 The GAAR has held the product of the appellant classifiable under Tariff Item 3825 90 00 of the CTA, 1975 on the ground that the actual process undertaken and the resultant product had not been accurately specified by the appellant and as such the only option available was to classify the said product in the residu....

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....cattle feed'. The entry at Sr. No. 102 of Notification No. 2/2017-Central Tax (Rate), inter-alia exempts 'cattle feed' and not the 'ingredient used for manufacturing cattle feed'. 9.4 Admittedly, the product of the appellant does not conform to any other description of the said entry at Sr. No. 102 of Notification No. 2/2017-Central Tax (Rate) viz. Aquatic feed, Poultry Feed etc. 9.5 It is settled principle of law that the exemption notification needs to be construed strictly and the burden to prove its entitlement is on the person (assessee/ appellant) claiming it. We may refer to the Hon'ble Supreme Court's judgement in the case of Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company reported at 2018 (361) E.L.T. 577 (S.C.) in this regard. 9.6 Therefore, we hold that the product 'Rice Bran (102+ Oil)' of the appellant is not covered by entry at Sr. No. 102 of Notification No. 2/2017-Central Tax (Rate), as amended. 10.1 In the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as corrected vide M.F. (D.R.) Corrigendum F.No. 354/117/2017-TRU Pt. dated 12.07.2017, entry at Sr. No. 103A of Schedule - I read as follows :- S. No. Chapter/ Heading/ heading/....