The Telangana Authority for Advance Ruling (AAR) recently ruled that the wastes, namely, Cinder Half-burnt Coal / Char Dolachar and ESP / Bag Filter Dust generated during the process of manufacturing Sponge Iron under DRI process, fall under HSN Code “2619 00 90” attracting 18% GST.
M/s. Jeevaka Industries Private Limited, the applicant are manufacturers of taxable goods i.e., sponge iron using coal-based manufacturing process.
The applicant has sought advance ruling on whether wnder 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 (Direct Reduction of Iron Ore) process?
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 at 2.5% under CGST/SGST Acts and also liable for cess at Rupees four hundered per ton. However, in their final submission they have averred that it is classifiable under HSN code “2619 00 90” or “2621 90 00”.
The Apex Court of India in the case of Union Of India v. Ahmedabad Electricity Co.Ltd, 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.
The Two-Member Bench of the Authority comprising B. Raghu Kiran, Additional Commissioner (Central Tax) and S.V. Kasi Visweshwar Rao, Additional Commissioner (State Tax)observed that “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.”
The Bench further clarified that no GST Compensation Cess at Rs.400/- per ton be applicable on sale of waste, i.e. Cinder Half-burnt coal, generated during the said process.
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