Key Pointers –

• The Applicant, EMS Cocos, engaged in the activities of Manufacturing and Trading of Coconut, Copra and Coconut shells.
• The issue involved here is whether the dried coconuts (shelled or peeled) used for human consumption shall be classified under Chapter 8, HSN 0801?
• The AAR observed that vide notification no. 2/2017 Central Tax Rate dated the 28th June, 2017, the supply of goods ‘Coconuts, fresh or dried, whether or not shelled or peeled’ are exempt from GST. Also, vide notification no. 1/2017 Central Tax Rate dated the 28th June, 2017, the supply of goods ‘Copra other than of seed quality’ attracts 5% GST (CGST 2.5%+ SGST 2.5%).
• The Circular 163/19/2021- GST dated 6th October 2021 clearly clarifies that the whole unbroken kernel could be taken out of shell only when it converts to copra. The Applicant takes the copra cuts into half, sun dries and segregates manually based on the round shape of copra, free of dirt/dust and send it as edible copra and the rest of copra which are irregularly shaped, dusty are sent to oil milling units.
• But as the Circular clearly states, Copra is classified under heading 1203 irrespective of use. Hence, the impugned goods of the Applicant are only Copra and the same shall be classified under Heading 1203 thereby attracting GST rate of 5% vide entry at SI.No. 66 of Schedule I of 1/2017-Central Taxes (Rate) dated 28.06.2017.