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The Gujarat Authority of Advance Ruling (AAR) ruled that 5% Goods and Service Tax (GST) applicable on ‘Maize Bran’.
Facts of the case:
The applicant, M/s. Maize Products is engaged in the manufacture and taxable supply of Maize Starch and its derivatives in their plant at P.O. Kathwada, Maize Products. In the course of manufacture Maize Bran is produced by corn wet milling which is a by-product and is sold as cattle feed.
Maize Bran is composed of approximately 12-25% starch, 10-13% protein, 33-42% hemicelluloses, 15-18% cellulose, 3-6% oil and 1-2% other components. A maize bran stream coming from the dewatering process contains about 30 to 50% solids. The maize bran is usually a mixture of bran fraction and other by-product and is, therefore, a very loosely defined product of highly variable composition usually sold as a major ingredient for cattle feed.
Interpretation of law:
The applicant contended that in the pre-GST era, Maize Bran was cleared by him under Chapter Sub-heading No.23021010 of the Central Excise Tariff Act, 1985 with Nil duty and that the same is reflected in the monthly ER-1 returns submitted by him for the months of April 2017 to June 2017.
In the Central Excise Regime, the classification and rate of duty were determined on the basis of the Central Excise Tariff Act, 1985. As per CETA, 1985 the rate of duty of the said product was NIL. Whereas in GST regime, classification of the goods is determined on the basis of the Customs Tariff Act, 1975 (51 of 1975) and thereafter GST rate is determined on the basis of Notification No. 01/2017-CT (Rate) dated June 28, 2017, as amended from time to time issued under GST Act wherein six Schedules of the GST rates have been prescribed. Therefore, rate of duty determined in Central Excise regimes does not have any legal value as such on the inception of the GST Act with effect from 1st July 2017 GST rate and classification of any product are to be determined under the said GST Act.
The two-member bench of Sanjay Saxena and Mohit Agarwal ruled that the product ‘Maize Bran’ manufactured and supplied by M/s. Sayaji Industries Ltd. is covered under Entry Sr.No.103A of Notification No.1/2017- Central Tax (Rate) dated June 28, 2017, of the CGST Act, 2017 on which rate of GST chargeable is 5% (2.5% SGST and 2.5% CGST).