TaxTMI 
TaxTMI 
2022 (2) TMI 1210
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....TRIES PRIVATE LIMUED, SP 67, SKS Industrial Area, Reengus, Sikar- 332404, Rajasthan - (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) & (e) given as under: (a) Classification of any goods or services or both; A. GIST OF SUBMISSION AND INTERPRETATION OF THE APPLICANT 1. ADS Agro Industries Private Limited (hereinafter referred as Applicant) is a company registered on 15/07/2003 & having its distillery at SP-67, Shri Khatushyamji Industrial Complex, Ringus- 332 404. 2. The Applicant Company is a 100% grain-based distillery since 2013 and manufacturing alcohol using Grains (i.e. broken Rice - called "Nakku" in Trade) as raw material and its by-products are CO2, Fussel Oil. 3. Briefly stated herein, the Applicant Company while manufacturing alcohol, produces cattle feed' as a by-product which is technically known nationally and worldwide as DWGS (Distillers Wet Grain Solubles) in Wet Form also termed as "Wet Cake" in the Industry. This is primarily on account of the fact that the Applicant utilizes grains as raw materials. During distillation process, only the starch portion present in the Grai....
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....even negative value if it has to be disposed-off at some cost. Examples include gases, saw dust, smoke and other unsalable residues from the manufacturing process. Residue presents no accounting problems because it has no sales value, and therefore it is not included in the valuation stock. • This is the residue such a smoke, dust, gases, slag, etc., which arises in course of manufacturing process and practically no measurable sale or utility value. In certain types of processes and operations, some material physically disappears on account of shrinkage, evaporation etc., with the result that the quantity of the output is less than the input. Such wastage is termed invisible waste where the residual instead of fetching any value, creates a problem for its dispose which entails further costs. Special arrangements have to be made for disposal and refuse, effluent, obnoxious gases, etc. • The effect of the residue/ waste is to reduce the quantity of output. Above would clearly reveal that the cattle feed being produced is not a residue or waste, but a by-product. The waste being generated by the Applicant Company is in the nature of water (Spent Wash), whi....
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.... quantity and value by investing in Centrifuge Decanters and by any stretch of imagination cannot be considered as mere residue or waste. Accordingly, DWGS is a saleable by-product and used as Animal Feed/Cattle Feed/Poultry Feed and hence it is a sale of Animal Feed/Cattle Feed/Poultry Feed. 6. That the Company is selling the Cattle Feed / Poultry Feed (DWGS) to its dealers who are further selling the same as cattle feed/ poultry feed/ animal feed supplement in the market and similarly to the end consumers are purchasing these goods as cattle feed/ poultry feed/ animal feed supplement and using as such. TAXABILITY UNDER GST Relevant entry no. 2303 and 2309 under GST Tariff is given hereunder for ready reference: - S.No Chapter/Heading/Sub-Heading/Tariff Item Description of Goods CGST/SGST Rate IGST Rate 1 2303 Residues of Starch manufacture and similar residues, beet pulp, bagasse, and other waste of sugar manufacture, brewing or distillery dregs and waste, whether or not in the form of pellets. SGST @ 2.5% CGST @2.5% 5.00% 2 2309 Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grass, hay &....
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..... The high energy, mid-protein, and high digestible phosphorus content of DWGS make it a very attractive, partial replacement for some of the more expensive, traditional energy (com), protein (soyabean meal), and phosphorus (mono or dicalcium phosphate) used in animal feeds. DWGS is also added to properly formulated feeds and results in excellent animal health, performance, and food product quality. The Chemical Composition of DWGS is:- a. Water -72 % b. Protein -5.80% c. Fat -2.40 % d. Fiber -2.38 % e. Carbohydrates -2 % f. Ash-1.31% g. pH-3.90 No environmental agency allows any distillery to sell any hazardous products such as distillery dregs or spent wash as known the untreated characteristics. • It is much important to understand that it as animal feed under HSN Code 2309 as DWGS or Cattle feed in its marketable form. The word dregs better come as residual which is of insignificant value, volume and usage. • Here our by-product DWGS is having a significant value, volume and usage as cattle feed. The input -output ratio is also significant. For Example, Cost of Grain is Rs. 17.50/kg than....
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....oes "not suppose our merchants, or geologists or botanists". d. In Case of United Copiex (India) Pvt. ltd. v/s CST-94 ELT 28(SC) wherein it was held that classification is to be based on statutory definition, if any, and in the absence thereof on trade or common parlance. e. As per case of Plasmac Machine Mfg. Co. Pvt. Ltd. v/s CCE 51 ELT 161 (SC), goods are to be classified according to their popular meaning as understood in the commercial sense and not as per the scientific/technical meaning. f. As per case of CCE v/s Favourite Industries-2012 (278) ELT 145 (SC), it is a well settled legal proposition of law that liberal construction is to be given to beneficial notification and therefore the product should be classified on the basis of its use. Further, there is a principle of statutory interpretation (Harmonious construction) used in the Indian legal system. It holds that when two provisions of a legal text seem to conflict, they should be interpreted so that each has a separate effect and neither is redundant or nullified. g. As per case of Rhino Machines Pvt. Ltd. v/s CCE, Vadodara-2005 (181) ELT 63 (T), goods have to be assessed in the for....
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....l. Another by-product is obtained by further extraction, processing and conversion into Wet Cake, which is Cattle Feed/ Poultry Feed. 3. The applicant wants to seek clarification whether DWGS (Distillers Wet Grain Solubles) is by-product or residues and also seek classification thereof. 4. Before we delve deep to decide the case, it would be proper in the fitment of justice to discuss the relevant provisions of the statute which are as under- • CGST rates on goods as per [Notification No. 1/2017-Central Tax (Rate), dated 28th June, 2017, as amended from time to time] (as on 31.3.2021):- S.No. Sub-heading /Chapter / Heading/ Tariff item Description of Goods Rate 1 2 3 4 104 2303 Residues of starch manufacture and similar residues, beet-pulp, bagasse and other waste of sugar manufacture, brewing or distilling dregs and waste, whether or not in the form of pellets 2.5% • CGST rates on goods as per [Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017, as amended from time to time]:- S.No. Sub-heading /Chapter / Heading/ Tariff item Description of Goods Rate 1 2 3 4 102 "2301,....
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....ia, the Brewing is the production of beer by steeping a starch source (commonly cereal grains, the most popular of which is barley/wheat) in water and fermenting the resulting sweet liquid with yeast. 11. In the instant case, it is fact that in the process of manufacturing of alcohol, the 'starch portion' present in the wheat grain is utilized through distillation process. Means 'starch present in the wheat grain' is being processed in brewery. Hence, main key element i.e. 'starch' is present here. Further, the applicant company is a kind of brewery where brewing or distilling process are being undertaken. In the result of manufacturing process of alcohol, several residues, dregs and waste are come into picture. 12. As far as nature of DWGS (Distillers Wet Grain Solubles) is concern, it is nothing but brewing or distilling dregs and waste as it is come out in the picture as a result of brewing or distilling process. 13. As per the Explanatory Notes to the HSN, heading 2303 includes residues of starch manufacture and similar residues (from maize (corn), rice, potatoes, etc.); beetpulp; bagasse; other waste products of sugar manufacture; brewing or di....