5% GST on Distillers Wet Grain Solubles: AAR
The Rajasthan Authority for Advance Ruling ruled that there will be 5% GST on distillers wet Grain Solubles.
Background
ADS Agro Industries Private Limited 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.
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 the distillation process, only the starch portion present in the Grain is utilized in production of the alcohol, which is the main product, and the other components viz. protein, fibre and oil are not utilized in the production of alcohol. Another by-product is obtained by further extraction, processing and conversion into Wet Cake, which is Cattle Feed/ Poultry Feed. It is imperative to put on record that no other use of wet cake other cattle feed is possible & hence, cattle feed is a by-product in the process of manufacture of alcohol and cannot be termed as ‘residue’.
Issue raised
The applicant sought advance ruling on the issue whether in the facts and circumstances of the case elaborated in body of ground hereunder, DWGS is by-product or residues; Whether “DWGS” is to be classified under Tariff Entry 2309 of GST Tariff; and whether in the facts and circumstances of the case, “DWGS” which is sold as Cattle Feed in the Trade are to be classified under Tariff Entry 2309 of GST Tariff.
Ruling
The coram of J. P. Meena (Central Tax) and M. S. Kavia (State Tax) found that DWGS (Distillers Wet Grain Solubles) is an inevitable outcome in the process of manufacturing of alcohol. Apart from nomenclature whether it is residue or by-product, we find that it is a kind of brewing or distilling dregs & waste and is classifiable under Chapter / Heading/Sub-heading / Tariff item 2303 of GST Tariff.
The coram ruled that it is a kind of brewing or distilling dregs & waste and “DWGS” is to be classified under Chapter / Heading/Subheading / Tariff item 2303 of GST Tariff.
