In Re: M/s. Gokul Agro Resources Limited
GST
2018 (10) TMI 308 – AUTHORITY FOR ADVANCE RULING, GUJARAT – 2018 (18) G. S. T. L. 68 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, GUJARAT – AAR
Dated:- 30-8-2018
GUJ/GAAR/R/2018/18 (IN APPLICATION NO. Advance Ruling/SGST&CGST/2017-18/AR/30)
GST
R.B. MANKODI AND G.C. JAIN MEMBER
Present for the applicant: Shri Ankit Parikh, CA
The applicant, M/s. Gokul Agro Resources Limited, is engaged in the business of Oil Seed Crushing (Oil Mills), Refining Oil, Solvent Extraction, Fractionation, Hydrogenation and Packing. The applicant is dealing in edible oil such as Soyabean Oil, Cottonseed Oil, Mustard Oil, Groundnut Oil, Palm oil (Palmolein), Sunflower Oil, Vanaspati and Industrial Oil such as Castor Oil.
2.1 The applicant has submitted that it purchases Crude Palm Oil (HSN 1511 10 00) from either a foreign vendor or local vendor. Thereafter, the said Crude Palm Oil is refined in the storage tank from which Refined Palm Oil
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heat exchanger before being fed into the crystallizer. The feeding of oil into the crystallizers is more or less continuous. Once the oil reaches high level, the crystallizer is ready for the cooling programme.
The cooling cycle for each crystallizer is being controlled by an individual microprocessor – based programmable controller. Cooling tower water is used for initial pre-cooling, thereby saving energy. Due to the large cooling surface in crystallizer in relation to the volume of oil, the applicant is able to obtain crystallized slurry, which are proven to be most suitable for the membrane filtration system.
The cooling cycle for each crystallizer is completed within a few hours. The crystallized slurry is then ready to be filtered at the membrane filtration system.
Filtration Section
The partially crystallized RBD palm oil is fed to membrane filter press by filter feed pump. The filter is of mixed packed type and 3-piece detachable type of rubber membrane with individual squ
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as it is an outcome of Refined Palm Oil undergoing fractionation process. Also, Chapter 3823 mainly deals with the products which are more from the perspective of industrial use and not used for food application meant for human consumption. The applicant submitted that the RBD Palm Stearin which is manufactured by it is completely used for food applications meant for human consumptions. Hence, the applicant is of the view that RBD Palm Stearin should fall under Chapter 1511 and not under Chapter 3823.
6.1 The applicant, vide their letter dated 04.01.2018, submitted sample copies of Central Excise Invoices issued during April, 2017 and May, 2017 and copy of Central Excise Return for the month of June, 2017 wherein Central Excise Duty was paid under Chapter 38231900. It is further submitted that during the earlier law, the applicant was of the opinion that RBD Palm Stearin would fall under Chapter 3823 1112 and 3823 1119 and had raised the invoices by charging Excise Duty at the rate o
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usion as to whether the product falls under Chapter 15 or Chapter 38 of the GST Tariff.
7. The Central Goods and Services Tax and Central Excise Commissionerate, Ahmedabad North inter-alia referred to Circular No. 81/2002-Customs dated 03.12.2002 wherein CRCL has advised that 'palm stearine' falling under heading 15.11 is basically triglyceride (Esters) of fatty acids and 'Stearin' falling under heading 38.23 is basically a free fatty acid. It is submitted that the triglyceride of fatty acids (esters) and free fatty acids are two different organic compounds and distinguishable by chemical tests i.e. by determining the ester value.
8. We have considered the submissions made by the applicant in their application for advance ruling as well as at the time of personal hearing and views of Central Goods and Services Tax and Central Excise Commissionerate, Ahmedabad North.
9. The issue involved in this case is regarding classification of the product 'RBD (Refined Bleached Deodorised) Palm
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irst Schedule to the Customs Tariff Act, 1975, prior to enactment of the Finance Act, 2017 were as under-
HS Code
Description of goods
Unit
(1)
(2)
(3)
1511
Palm oil and its fractions, whether or not refined, but not chemically modified
1511 10 00
– Crude oil
kg.
1511 90
– Other
1511 90 10
Refined bleached deodorized palm oil
kg.
1511 90 20
Refined bleached deodorized palmolein
kg.
1511 90 90
Other
kg.
HS Code
Description of goods
Unit
(1)
(2)
(3)
3823
Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols
– Industrial monocarboxylic fatty acids; acid oils from refining:
3823 11
Stearic acid :
Palm stearin :
3823 11 11
– Crude
kg.
3823 11 12
– RBD
kg.
3823 11 19
– Other
kg.
3823 11 90
Other stearic acid or stearin
kg.
3823 12 00
Oleic acid
kg.
3823 13 00
Tall oil fatty acids
kg.
3823 19 00
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ary (TRU-I), it has been mentioned as follows :
S.No.
Amendment
Clause of the Finance Bill, 2017
1
To:
(i) ………
(ii) Create new tariff item 1511 90 30 for Refined bleached deodorised palm stearin” to harmonize Customs Tariff in accordance with WCO classification decision.
(iii) Substitute tariff items 3823 11 11 to 3823 11 90 and entries relating thereto with tariff item 3823 11 00.
(iv) ……
[109(b)]
11.4 Therefore, the relevant entries for Chapter Heading 1511 and 3823 of the First Schedule to the Customs Tariff Act, 1975 are now as under –
HS Code
Description of goods
Unit
(1)
(2)
(3)
1511
Palm oil and its fractions, whether or not refined, but not chemically modified
1511 10 00
– Crude oil
kg.
1511 90
– Other
1511 90 10
Refined bleached deodorized palm oil
kg.
1511 90 20
Refined bleached deodorized palmolein
kg.
1511 90 30
Refined bleached
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in the context of the then existing entries in the First Schedule to the Customs Tariff Act, 1975. Similarly, in the judgement of Hon'ble Supreme Court, in the case of Commissioner of Central Excise, Customs & Service Tax, Vishakhapatnam Vs. Jocil Ltd. [2011 (263) E.L.T. 9 (S.C.)] = 2010 (12) TMI 24 – SUPREME COURT OF INDIA, it was held that 'palm stearin' is specifically identified in Chapter sub-heading No. 3823 11 as 'Palm Stearin', and further differentiated as 'Crude' and 'RBD' in sub-heading Nos. 3823 11 11 and 3823 11 12 respectively. However, the said judgement was rendered for the period August, 2003 to November, 2004, in the context of entries in the First Schedule to the Customs Tariff Act, 1975 existing during that period. As the relevant entries for Chapter Heading 1511 and 3823 have been amended vide Finance Act, 2017, the CBEC Circular No. 81/2002-Customs dated 3.12.2002 and the Hon'ble Supreme Court's judgement in the case of Jocil Ltd. (supra) are not applicable in th
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