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July 26, 2021

GST AAR Telangana ruled that Unburnt or half-burnt coal and dust shall attract 18% GST

by Mahesh Mara in GST, Legal Court Judgement

GST AAR Telangana ruled that Unburnt or half-burnt coal and dust shall attract 18% GST

Fact and Issue of the case

M/s. Jeevaka Industries Private Limited are manufacturers of taxable goods i.e., sponge iron using coal based manufacturing process.

Based on the facts mentioned hereinafter, the applicant humbly seeks Advance Ruling on the following issues of Classification:-

1. Under which HSN Code should the following goods be classified: The wastes, namely,-

a. Cinder Half-burnt Coal / Char Dolachar and

b. ESP / Bag Filter Dust generated during the process of manufacturing Sponge Iron under DRI process?

2. Would the GST Compensation Cess @ Rs.400/- per tonne be applicable on sale of waste, i.e. Cinder Half-burnt coal, generated during the said process?

Based on the facts mentioned hereinafter, the applicant humbly seeks Advance Ruling on the following issues of Classification:-

1. Under which HSN Code should the following goods be classified: The wastes, namely,-

a. Cinder Half-burnt Coal / Char Dolachar and

b. ESP / Bag Filter Dust generated during the process of manufacturing Sponge Iron under DRI process?

2. Would the GST Compensation Cess @ Rs.400/- per tonne be applicable on sale of waste, i.e. Cinder Half-burnt coal, generated during the said process?

Observation of the AAR

The AAR has considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri. Neelesh Vithalani, CA & AR during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At the outset, we would like to state that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the TGST Act.-

1. Originally, the applicant was of the opinion that half-burnt or non-burnt coal generated in their factory was classifiable under HSN code heading “2701” and therefore liable to pay tax @2.5% under CGST/SGST Acts and also liable for cess @400/- per ton. However, in their final submission they have averred that it is classifiable under HSN code “2619 00 90” or “2621 90 00”.

2. In the original application, they have requested to give a ruling on applicable rate of tax on ESP/Bag Filter dust. However, in their final submission they have averred that this is classifiable as tariff item “261 900 90”.

3. The Hon’ble Apex Court of India in the case of Union Of India v. Ahmedabad Electricity Co.Ltd [2003(158)E.L.T.3] held that unburnt or partly burnt pieces of coal have no capacity to produce flame because of low or reduced calorific value and therefore classified such coal/dust as Cinder.

Further, Hon’ble CESTAT in the case of Commissioner, Central Excise and Service Tax, Hyderabad II Vs Reactive Metals of India Pvt. Ltd reported in 2018 (8) GSTL 194 (Tri-Hyd ) held that by -Product Char – Dolochar emerging during manufacture of Sponge Iron is classifiable under CETH 2619 00 90. Similar stand has been taken by Hon’ble CESTAT in the case Bellary Steel &Alloys Ltd v. CCE.,[2006(199)ELT 808]. W.R.T ESP bog/filter dust, we hold that they are also classifiable under 2619 00 90.

4. In view of the above, both unburnt or half-burnt coal and dust falls under entry 28 of Schedule III of Notification No.01/2017 Dated: 28.06.2017 and attracts 18% tax under IGST and 9% under CGST/SGST Acts

Conclusion

In view of the observations stated above, the following rulings are issued:

Question raisedAdvance ruling issued
1. Under which HSN Code should the following goods be classified: The wastes, namely, a. Cinder Half-burnt Coal / Char Dolachar and b. ESP / Bag Filter Dust generated during the process of manufacturing Sponge Iron under DRI process?(1a) & (1b) commodities fall under HSN Code “2619 00 90”
2. Would the GST Compensation Cess @ Rs.400/- per tonne be applicable on sale of waste, i.e. Cinder Half-burnt coal, generated during the said process?No

Read full order of AAR from below

GST-AAR-Telangana-ruled-that-Unburnt-or-half-burnt-coal-and-dust-shall-attract-18-GST

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