Name of Applicant:

Jeevaka Industries Private Limited

Appeal No:

TSAAR Order No. 04/2021

Ruling pronounced by:

GST AAR Telangana

Date of Ruling:

19-07-2021

The applicant is manufacture of sponge iron using coal-based manufacturing process. At the end of the process, certain portion of coal remains half-burnt and comes along with the finished product i.e. sponge iron. This half-burnt portion of coal, technically called “Cinder Half-burnt Coal”/ “Char-Dolachar” has negligible fuel content. The non-burnt coal so generated is sold, usually to brick producers for use in their manufacturing process. The dust particles generated during the process are collected in Bag Filters and through ESP (Electro Static Precipitator). This is also sold to manufacturers of bricks for mixing with sand, cement etc. The applicant sought ruling in respect of questions stated below.

Question before Authority

Observations

Ruling

What is the HSN classification of the waste:

• Cinder Half-burnt coal/ Char Dolachar

• ESP/ Bag Filter Dust generated during the process of manufacturing sponge iron

• The Hon’ble Apex Court in Union of India vs. 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/Dolachar emerging during manufacture of sponge iron is classifiable under CETH 2619 00 90.
• Similar stand is taken by Hon’ble CESTAT in Bellary Steel & Alloys Ltd. vs. CCE [2006 (199) ELT 808].

• 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% IGST (9% CGST + 9% SGST)
• Both Half-burnt coal and dust shall fall under 2619 00 90.

Would 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 GST Compensation Cess shall be applicable.