TaxTMI 
TaxTMI 
2023 (11) TMI 1302
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.... fish meal in powder form. The respondent in all these writ appeals are also manufacturers of "fish meal (in powder form)". The respondent in all the writ appeals have earlier filed writ petitions in W.P. Nos. 16770, 16772, 16773, 16775 and 16776 of 2019 for issuance of a Writ of Certiorari to call for the records in relation to the proceedings of the 1st appellant, namely, the Circular issued by the Central Board of Indirect Taxes and Customs, New Delhi, dated 31.12.2018, insofar as it relates to Paragraph No. 4 and to quash the same. The prayer in all the five writ petitions referred above are same as in the four writ petitions which are also disposed of by this common judgment. 3. The impugned Circular has been issued to clarify that fish meals, meat cum bone meal (MBM) etc., attract GST of 5% under Sl. No. 103 in Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. The learned Single Judge of this Court quashed the clarification issued by the impugned Circular dated 31.12.2018 and as a sequel, held that the writ petitioners, so long as they make a finished product "fish meal" from their manufacturing units, can enjoy the benefit of exemption as provided under Sl. No. 1....
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....fication, it is seen that Sl. No. 103 of the notification would attract GST of 5%. 8. In exercise of powers under Section 11 of the Central Goods and Services Tax Act, 2017 ("CGST Act" for brevity), Notification No. 2/2017- Central Tax (Rate), dated 28.06.2017, was issued granting exemption for goods, the description of which is specified in Column 3 of the Schedule to Notification No. 2/2017. The entry relating to Sl. No. 102 with Tariff Items, Subheading and Description of Goods reads as follows : S.No. Chapter/Hearing/Subheading/ Tariff Item Description of Goods 102 2302, 2304, 2305, 2306, 2308, 2309 Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grss, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake. 9. It is also admitted that a Corrigendum dated 27.07.2017 was issued to the above notification dated 28.06.2017, whereby, Heading 2301 was added to Sl. No. 102 of the notification. On the effect of the Corrigendum, the Entry in Sl. No. 102 as per the notification dated 28.06.2017 should read as follows : S.No. Chapter/Hearing/Subheading/ Tariff Item Description of Goods 102 2301 - ....
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....ion, greaves 5% 4.2. A number of raw materials such as fish meal falling under heading 2301, meat and bone meal also falling under heading 2301, oil cakes of various oil seeds, soya seeds, bran, sharps, residue of starch and all other goods falling under headings 2302, 2303, 2304, etc. are used to manufacture/formulation of, aquatic feed, animal feed, cattle feed, poultry feed, etc. These raw materials/inputs cannot be directly used for feeding animal and cattle. The Larger Bench of the Hon'ble Supreme Court in the Commissioner of Customs (Import), Mumbai v. Dilip Kumar [2018 (361) E.L.T. 577] has laid down that inputs for animal feed are different from the animal feed. Said S.No.102 covers the prepared aquatic/poultry/cattle feed falling under headings 2309 and 2301. This entry does not apply to raw material/inputs like fish meals or meat cum bone meal (MBM) falling under heading 2301. 4.3. It is accordingly clarified that fish meals, meat cum bone meal (MBM) etc., attract 5% GST under S.No.103 in notification No. 1/2017-Central Tax (Rate), dated 28.06.2017." 13. It is the case of the writ petitioners that, prior to introduction of GST with effect from 1st July, 2017, fi....
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....prawn feed. B) Post GST, fresh fish continues to be exempt from GST. Further, exemption has been granted for Aquatic Feed under GST in terms of Entry Sl. No. 102 of Notification 2/2017 dated 28.06.2017 (as corrected by corrigendum and as amended). More importantly, items such as feed supplements, feed additives and concentrates used in the manufacture of Aquatic Feed also continue to be unconditionally exempt under the GST regime by virtue of Entry Sl. No. 102 of Notification 2/2017 dated 28.06.2017. C) In this background, it is quite evident that the intention of the legislature is to grant exemption for Aquatic Feed such as shrimp feed and prawn feed and other items such as feed supplements, feed additives and the concentrates for manufacture of Aquatic Feed. In fact, Aquatic Feed is consumed by Fish which is again exempt from tax, completing a full circle where the items in the entire circle are exempt from GST today and were always exempt from Central Excise Duty and VAT earlier. Therefore, there is absolutely no reason how and why Fish Meal alone could be subjected to tax when the sole ingredient for manufacture of fishmeal, namely, Fish and the sole final product manufact....
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....not found in the exemption notification, it is stated that the exemption is available only to aquatic feed including shrimp feed, prawn feed, poultry feed and cattle feed, etc., and the product manufactured by the petitioners is not exempted. In the counter affidavit, a distinction was made between the "additives or supplements" and "raw material" for the manufacture of good which are brought under the Heading 2302. In the counter affidavit, it is pointed out that the notifications are very clear and it was never the intention of the GST Council to exempt fish meal from GST, as fish meal in powder form unfit for human consumption falls only under the Entry 2301. It is reiterated that there is no room for any ambiguity and it is only due to the Heading Code appearing in both the Entries, a clarification was required. Sum and substance, it was pointed out that the clarification is not in deviation or in conflict with the previous notification dated 28.06.2017 and therefore, the petitioners' product cannot be given exemption. 17. In the counter affidavit, the circumstances under which clarification was issued by the impugned Circular, is also narrated. Stating that the Circular d....
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....the impugned clarificatory Circular cannot overwrite the exemption provided under the statutory notifications issued earlier by the Government. The learned Single Judge then dealt with the judgment of the Hon'ble Supreme Court in Dhilip Kumar's case (supra) and held that the said judgment is not germane to the decision of the 2nd appellant to clarify the notification by way of the impugned Circular. 20. Learned Additional Solicitor General appearing for the Revenue/appellants in the writ appeal and respondents in the writ petitions, referred to the chronology of events and submitted that, as per Article 279-A of the amended Constitution, the GST Council is empowered to make recommendations to the Union and State Government on issues relating to GST. It is pointed out that, on the recommendations of the 14th Meeting of the GST Council held on 18th and 19th May, 2017, the Board has issued Notification No. 1/2017-C.T.(Rate), dated 28.06.2017, prescribing the rates of tax in respect of specified goods based on their classification, upon introduction of GST with effect from 01.07.2017. It is pointed out by the learned Additional Solicitor General that the notification vide Noti....
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....r General relied upon the General Rules for the Interpretation of the Harmonized System. He pointed out that the description of an article or group of articles under the Tariff Heading should be taken as such and one cannot misread any notification issued by GST Council merely on the basis of the Tariff Heading. In other words, referring to the fact that the description of articles has never undergone any change by the exemption notification, the interpretation of the Board should be preferred even if there is any discrepancy. Learned Additional Solicitor General pointed out all the writ petitioners have classified and self assessed their goods only under Tariff Heading 2301 and not under Tariff Heading 2309 and submitted that the conclusion reached by learned Single Judge by referring to Tariff Heading 2309 is erroneous. 23. The learned Additional Solicitor General also relied upon a few judgments of the Hon'ble Supreme Court, particularly the judgment of the Constitution Bench of the Hon'ble Supreme Court in Dilip Kumar's case (supra), wherein, the Hon'ble Supreme Court has ruled in favour of Revenue. The learned Additional Solicitor General submitted further tha....
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....nt of the Hon'ble Supreme Court in State of Maharashtra v. Shri Vile Parle Kelvani Mandal and others reported in (2022) 2 SCC 725 for the proposition that the assessee cannot rely on ambiguity or doubt to claim benefit of exemption. 26. As against the submissions of the learned Additional Solicitor General, the learned counsel appearing for the respondents in the writ appeals as well the writ petitioners which are clubbed along with the writ appeals, submitted that the power to grant exemption is available only to the Government when it is necessary in the public interest and that by the impugned Circular, the exemption granted to the petitioners' product "fish meal" has been withdrawn quite contrary to the notification vide Notification No. 2/2017 dated 28.06.2017. The learned counsel appearing for the writ petitioners raised a legal submission that, if the clarification by the impugned Circular is contrary to the notification by Notification No. 2/2017 dated 28.06.2017, merely because the clarification had the approval of GST Council or approval by the Government will be of no legal consequence to save the notification. In other words, it is contended that, once this Cou....
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....ed or prawn feed manufacturers. 31. After the corrigendum pursuant to the Notification No. 2/2017 dated 28.06.2017, the entry in Sl. No. 102 is seen from the following table : S.No. Chapter/Hearing/ Sub-heading/Tariff Item Description of Goods 102 2301, 2302, 2308, 2309 Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grss, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake. Whereas, Sl. No. 103 of Notification 1 of 2017, which relates to Chapter Heading 2301 contains goods with the following description : "Flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption, greaves." In other words, the description of goods in Sl. No. 102 of Notification No. 2 of 2017 includes Tariff Headings 2302, 2304, 2305, 2306, 2308 and 2309 and after the corrigendum dated 27.07.2017, includes Tariff Heading 2301, and there is no change in the description of goods. It is to be noted that the description of goods found in Sl. No. 103 of Notification No. 1 of 2017 under Tariff Heading 2301 attracts GST of 5%. The description....
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....quatic feed and it is being supplied to the manufacturers of aquatic feed. 32. This Court is unable to discard the submissions of the learned Additional Solicitor General appearing for the Revenue regarding the classification of goods and the nomenclature as per the principles found in the General Rules for the Interpretation. From the reading of the two notifications, fish meal, unfit for human consumption, is found only in Sl. No. 103 of Notification No. 1 of 2017 and not found in Sl. No. 102 of Notification No. 2 of 2017. When Sl. No. 102 of Notification No. 2 of 2017 refers to description of goods which are exempted from GST, inclusion of Tariff Heading 2301 in both notifications requires a clarification or an explanation. The only plausible explanation is that the Government has granted exemption to the goods falling under Tariff Heading 2301 only if fish meal (in powder form) manufactured by the writ petitioners is sold as an aquatic food or shrimp feed or prawn feed without an addition of other ingredients. We are unable to find any explanation for charging the goods with a description found in Tariff Heading 2301 as per Sl. No. 103 with GST of 5%. So long as the Tariff Hea....
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.... meal, unfit for human consumption, in powder form, which is manufactured by writ petitioners. The learned Single Judge failed to consider the position that the levy of duty or exemption is only in respect of goods specified in Column (3) of Schedule and the goods which are not given by description cannot be assumed or included in the exemption notification. It is true that fish meal in powdered form comes under Tariff Heading 2306 is exempted. When it is unfit for human consumption, it can be included only under Tariff Heading 2301. Therefore, the observation of learned Single Judge that fish meal in powder form comes under two Tariff Headings, namely 2301 and 2309, is not warranted, especially when it is not the case of writ petitioners that the goods manufactured by them falls under Tariff Heading 2309. 35. The Hon'ble Supreme Court, in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company reported in 2018 (361) E.L.T. 577 (S.C.), has held as follows : "52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes wi....