TaxTMI 
TaxTMI 
2021 (10) TMI 148
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....ts are manufactured from the mixer which is prepared by mixing the aforesaid raw materials in desired proportion, that the HSN code of both the products is 68159910 and that they are paying GST @ 5% on 'Fly Ash Bricks' and 12% on 'Fly Ash Blocks' till notification No:24/2018-Central Tax (Rate) date 31.12.2018. The appellant had also enclosed copies of Sales invoice in respect of Fly Ash Bricks and Fly Ash Blocks. They have submitted the following question for the purpose of advance ruling: "Whether supply of Fly Ash Bricks and Fly Ash Blocks are covered under Chapter heading 68159090 and liable to taxed @ 5% and @ 12% respectively under the GST Act?" 4. After going through the application for Advance Ruling of the appellant, their submission as well as the records of the case, the GAAR found as under: (i) That 'Fly Ash Bricks' is specifically covered under Tariff item no.68159910 whereas 'Fly Ash Blocks' are covered under the Tariff item no. 68159990(others) of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). (ii) That both Fly Ash Bricks and Fly Ash Blocks appear at Sr. No.177 in Schedule-II of the Notification No:01/2017-Central Tax(Rate) dated 2....
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....Mahalaxmi Cement products and Timber) are classifiable under Tariff item No.68159910 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Applicability of GST rate on the said product would be 12% GST (6% SGST + 6% CGST) upto 14.11.2017 and 18% GST (9% SGST + 9% CGST) with effect from 15.11.2017 as per Notification No:01/2017Central Tax(Rate) dated 28.06.2017 (as amended from time to time) issued under the CGST Act, 2017 (2) The product 'Fly Ash Blocks' manufactured and supplied by Dipakkumar Ramjibhai Patel (M/s. Mahalaxmi Cement products and Timber) are classifiable under Tariff item No.68159990 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). Applicability of GST rate on the said product would be 12% GST (6% SGST + 6% CGST) upto 31.12.2018 and 5% GST (2.5% SGST + 2.5% CGST) with effect from 01.01.2019 as per Notification No:01/2017Central Tax(Rate) dated 28.06.2017 (as amended from time to time) issued under the CGST Act, 2017. 6. Aggrieved with the aforesaid ruling, the appellant has filed the present appeal on 31.08.2020. The appellant has submitted as under: (i) They are a proprietary concern duly registered under the Ce....
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....s not lead to the emission of greenhouse gases. (d) Production of clay bricks damages the top-soil whereas there is no pollution or environmental damage in the manufacturing process of Fly Ash Bricks, hence it has been put into the white category of products. (e) Fly Ash Brick does not demand the use of local agricultural soil, which in case of clay bricks is very often extracted from the farms leading to loss of fertile soil and losses to farmers. (f) In opinion of many construction workers and supervisors, the Fly Ash Brick building requires less water during construction. This is a very significant advantage in a country that faces water shortages practically every year. (ix) After introduction of the GST regime, the product Fly Ash Bricks and Fly Ash Blocks were classified under Notification No. 1/2017 (CGST-Rate) dated 28.06.2017 at Sr. no. 177 as under for the period from 1.7.2017 to 14.11.2017: Serial No Chapter Heading Description of Goods GST Rate 177 6815 Fly Ash Bricks and Fly Ash Blocks 12% (x) As per amendment made by Notification No. 41/2017 - Central Tax (Rate) dated 14.11.2017, "Fly Ash Bricks" were omitted from the entry 177 of schedule II....
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.... as expressly stated, in the Statement of Objects and Reasons, that the central excise tariffs are based on the HSN and the internationally accepted nomenclature was taken into account to "reduce disputes on account of tariff classification". Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of central excise tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of Terms has a different purpose and, therefore, the specific purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must be preferred, in case of any difference between the meaning of the expression given in the HSN and the meaning of that term given in the Glossary of Terms of the ISI." It was concluded by Hon. Supreme Court as under: "19. We are of the view that the Tribunal as well as the High Court fell into th....
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....rom Odisha stated that at Sr. No.40 of Annexure I1 of the Agenda Notes to agenda item 6(i), the rate of tax on fly ash bricks was rightly proposed to be reduced from 12% to 5%. He suggested that fly ash aggregates, which were chip like products and consumed almost 90% of fly ash, should also be covered in this entry and should be charged to tax at the rate of 5%. Shri TuhinKanta Pandey, Principal Secretary (Finance), Odisha, suggested that fly ash aggregates should be classified under Chapter Heading 68 15. The Secretary suggested that rate of tax on fly ash aggregate with 90% or more fly ash content, falling under Chapter Heading 6815 may be reduced to 5%.The Council agreed to the suggestion." (xix) Therefore, on going through the GST Council Minutes, it seems that the intention was to tax fly ash bricks irrespective of the content of fly ash at the rate of 5% and fly ash aggregate at the rate of 5% if the fly ash content was more than 90%. Therefore, the council has made Recommendations for Changes in GST/IGST Rate and clarifications in respect of GST Rate on certain goods as per discussions in the 23rd GST Council Meeting held on 10th November, 2017 for the product in question....
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....sh Bricks manufacturer for ready reference and therefore, the advance ruling order is required to be modified in the present appeal by holding that Fly Ash Bricks are covered by entry 225B of Schedule I of notification no 1/2017 Central Tax (Rate) Dt:- 28.06.2017. (xxiii) In the alternative, they further rely upon the general rules of interpretation of the Customs tariff which have been borrowed for the purpose of interpreting GST rate notification by clause (iv) of the Explanation to the rate notification issued under the GST Acts. Rule 2(a) of the general rules of interpretation which is relevant for the present purpose reads as under: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled." (xxiv) They submit that in any case if in taxing statutes two views are possible then t....
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....he notification no 35/2020 Central Tax Dt: -03.04.2020 and notification no.55/2020 Central Tax Dt: - 27.06.2020 which speaks that any appeal which is required to be filed between 20/03/2020 to 30/08/2020 can be filed on or before 31/08/2020. 7. The appellant has concluded his submission by requesting as under: (a) The appeal may please be admitted for regular hearing by condoning delay in view of notification no.35/2020 & 55/2020 of Central Tax. (b) The impugned order passed by the learned Advance ruling authority in so far as it holds that Fly Ash Bricks is covered by entry 453 of Schedule III of notification no 1/2017 Central Tax (Rate) dated 28.06.2017 and liable to 18% after 01.01.2019 may please be set aside /modified; (c) It may please be held that "Fly Ash Bricks" is covered under the entry 225B of Schedule I of notification no.1/2017 Central Tax (Rate) dated 28.06.2017 and therefore taxable at the rate of 2.5% CGST + 2.5% SGST; 8. The appellant has submitted an email on 16.12.2020 attaching a copy of Test Result dated 15.12.2020 issued by Mukesh A.Patel Civil Engineering Laboratory, Gandhinagar in respect of the sample product 'Fly Ash Brick' of Shree Ma....
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.... requested to admit their appeal for regular hearing by condoning delay in filing appeal in view of the aforesaid notifications. We, therefore, find it necessary to go through the provisions of the aforementioned notifications. Notification No.35/2020-Central Tax dated 03.04.2020 reads as under: "G.S.R.....(E).- In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act), read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), and section 21 of Union Territory Goods and Services Tax Act, 2017 (14 of 2017), in view of the spread of pandemic COVID-19 across many countries of the world including India, the Government, on the recommendations of the Council, hereby notifies, as under,- (i) where, any time limit for completion or compliance of any action, by any authority or by any person, has been specified in, or prescribed or notified under the said Act, which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action has not been made within such time, th....
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.... such other record, by whatever name called, under the provisions of the Acts stated above;" 11.3 As per the provisions of Notification No.35/2020-Central Tax dated 03.04.2020(as amended), any appeal which was required to be filed between 20.03.2020 and 30.08.2020 can be filed on or before 31.08.2020. We find that the appellant was required to file the appeal in the present case, on or before 07.08.2020, but has filed the same on 31.08.2020 i.e. within the time limit provided in the aforementioned notification. In view of the above, we find that there is no delay on the part of the appellant in filing the said appeal which has been filed by them within the time limit prescribed in the Notification No.35/2020-Cenral Tax dated 03.04.2020(as amended). 12. Now, the issue that needs to be discussed is the proper classification of the product 'Fly Ash Bricks' and the applicable rate of Goods and Services Tax on the said product. As per explanation (iii) and (iv) of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the Customs Tarif....
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....on No.01/2017-Central Tax(Rate) dated 28.06.2017, we find that 'Fly Ash Bricks' appears at Sr.No.177 in Schedule-II of the said notification on which the applicable rate of GST is 12% (6% SGST + 6% CGST). The same reads as under: S.No. Chapter/Heading/ Subheading/Tariff item Description of goods 177. 6815 Fly Ash Bricks and Fly Ash Blocks. 16. Notification No:01/2017-Central Tax(Rate) dated 28.06.2017 has been amended vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017 (effective from 15.11.2017) wherein the following amendment has been made in respect of Sr.No.177 of Schedule-II of said notification. "(xix) in S. No. 177, in column (3), the words, "Fly ash bricks" shall be omitted;" Further, the following entry has been inserted vide Notification No: 41/2017-Central Tax (Rate) dated 14.11.2017 in Schedule-I of Notification No:01/2017-Central Tax(Rate) dated 28.06.2017 which reads as under: (xxvi) after S. No. 225 and the entries relating thereto, the following serial number and the entries shall be inserted, namely:- S.No. Chapter/Heading/ Subheading / Tariff item Description of goods 225A. 6815 Fly ash bricks or fly ash aggregate wi....
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....' (clay bricks) are covered under Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (on which GST liability is 5%) from 01.07.2017 itself, as stated by the appellant, we find that 'Fly Ash Bricks' also find mention at Sr.No.225A of Schedule-I of the above notification w.e.f. 15.11.2017(on which GST liability is 5%) albeit with a condition that it should contain 90% or more fly ash content w.e.f. 15.11.2017 till 31.12.2018 and in Sr.No.225B of Schedule-I of the above notification w.e.f. 01.01.2019 to till date. Further, since the above entry lays down the condition that only 'Fly Ash Bricks' with 90% or more fly ash content can be covered under entry of Sr.No.225B of Schedule-I of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time) and since the appellant, in their submissions, have specifically stated that the percentage of fly ash content in the 'Fly Ash Brick' manufactured and supplied by them contain 60% fly ash i.e. much less than the proportion of 90% 'fly ash content' mentioned in the aforementioned entry No.225B, the 'Fly Ash Bricks' manufactured and supplied by the appellant gets automatically excluded from t....
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....tt Benckiser (India) Ltd. v/s Commissioner, Commercial Taxes (2015) 7 SCC 126 wherein the following observations have been made: "8. The basic controversy, therefore, which arose before the High Court was whether the above items fell within the sub-Heading 3808.10.91. In this connection, we find that Kerala VAT Act is aligned with Customs Tariff which in turn is aligned with HSN and consequently each product in question was required to be seen in the context of HSN Code and judgments based thereon." The appellant have stated that, therefore, they rely upon HSN heading 6815 which describes as under: "Fly ash bricks or fly ash aggregate with 90 per cent or more fly ash content; Fly ash Blocks": 20.1 In this regard, we find that the above judgement is applicable only to those cases where there is a dispute with regard to the classification of a product i.e. where the product can be classified under two different headings of the Customs Tariff Act, 1975. Since, there is no such dispute with regard to classification of 'Fly Ash Bricks' as discussed in the foregoing paras, the said judgement is not applicable in the present case. 21. The appellant has contended that the entry was i....
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.....2017 w.e.f. 15.11.2017 which read as under: S.No. Chapter/Heading/ Subheading/Tariff item Description of goods 225A. 6815 Fly ash bricks or fly ash aggregate with 90 percent or more fly ash content" ; 21.3 We also find that Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 was further amended vide Notification No.24/2018-Central Tax(Rate) dated 31.12.2018 wherein Sr.No.177 of Schedule-II of Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 was omitted and Sr.No.225A of Schedule-I was amended to read as under: S.No. Chapter/Heading/ Subheading/Tariff item Description of goods 225A 66020000 Walking sticks including seat sticks. 225B 6815 Fly ash bricks or fly ash aggregate with 90 per cent or more fly ash content; Fly ash blocks"; 21.4 We, therefore find, that had it been the intention of the GST council to classify 'Fly Ash Bricks' and 'Fly Ash aggregates' separately, 'Fly Ash Bricks' would have been separately mentioned in Sr.No.225B above, in the same way as 'Fly Ash Blocks' has been mentioned in the said entry. Moreover, it is also seen that the conditions envisaged in the above entry remains unchanged even after an interven....
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.... manufacturing Fly Ash Bricks are using less than 60% of fly ash content and therefore, the advance ruling order is required to be modified in the present appeal by holding that Fly Ash Bricks are covered by entry 225B of Schedule I of notification no 1/2017 Central Tax (Rate) Dt:- 28.06.2017. 22.1 In this regard, we have to mention here that irrespective of the fact as to whether the 'Fly Ash Bricks' can be manufactured with 90% fly ash content or otherwise or whether majority of the manufacturers manufacture 'Fly Ash Bricks' which contain only 60% fly ash content or otherwise, the fact remains that Sr.No.225B of Schedule I of notification no 1/2017 Central Tax (Rate) dated 28.06.2017 covers only 'Fly Ash Bricks' with 90% or more fly ash content and therefore excludes 'Fly Ash Bricks' containing less than 90% fly ash content, as discussed in the foregoing paras. Since the appellant has specifically mentioned that the 'Fly Ash Bricks' manufactured and supplied by them contains only 60% fly ash content which has also been supported by the copy of Test Result dated 15.12.2020 submitted by them which states that their product contains only 60% fly ash content i.e. less than 90% fly a....
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....es. Rule-I gives primacy to the Section and Chapter Notes along with terms of the headings. They should be first applied. If no clear picture emerges then only can one resort to the subsequent rules. ......"- 23.3 Therefore, we hold that Rule 2(a) of the General Rules of Interpretation is not applicable for classification of 'Fly Ash Bricks' in the present case. 24. The appellant has also contended that in any case if in taxing statutes two views are possible, then the view in favour of the assessee should be adopted. Hence, presuming for the sake of argument that the classification of Fly Ash Bricks are as affirmed by the learned advance ruling authority is a possible view, even then since the classification as being canvassed by the appellant is also possible, the contention of the appellant is required to be accepted. They have relied upon the following judgements of the Apex Court to support their contention: (a) Mauri Yeast India Pvt. Ltd. v/s State of Uttar Pradesh and Another (2008) 5 SCC 680; (b) Commissioner of Income Tax v/s Kullu Valley Transport Co. Pvt. Ltd. AIR 1970 SC 1734. 24.1 We have gone through the aforementioned judgements. The judgement mentioned ....