By TIOL News Service

KOLKATA, JULY 01, 2020: BASED on intelligence shared by the DGGI, Delhi, GST sleuths raided distilleries for alleged misclassification of brewing or distilling dregs and wate. The actionable intelligence was - various companies engaged in manufacture of Ethanol from grains are evading payment of GST leviable on the supply of Distilled Grains with Soluble (DGS) by mis-classifying them under the Heading 2309 as prepared animal feed supplement. The solid and liquid, left after distillation process during the process of production of Ethanol from corn are known as Wet Distillers Grains with Soluble (WDGS or DGS). These DGS are highly rich source of proteins and fibre, which are further used in manufacturing animal feed. In central excise period "brewing or distilling dregs and waste" were classified under Tariff Head 2303, where rate of Central Excise Duty was nil. Presently in GST, the supply of goods falling within the Heading 2303 attract 5% GST. But the items under 2309 including prepared animal feed supplements are nil rated in GST regime.

Some of the distilleries falling in different states like Maharashtra, Tamil Nadu, Orissa, West Bengal, Delhi etc were classifying DGS under the chapter heading 2309 claiming incorrect exemption from payment of GST instead of classifying under the Chapter heading 2303 attracting 5% GST.

Acting on the inputs, the Kolkata team conducted searches in distilleries indulging in this practice across different states, to protect and recover Govt revenue. Kolkata zonal unit of DGGI undertook search operations in M/S IFB Agro Industries Lt. at Village Durgapur, P.O. Noorpur, Via Sarisha Ashram. South 24 Pargana, West Bengal along with its office premise and M/S Global Spirits Ltd at Plot No. B-7, Panagarh Industrial Park, Panagarh, Dist Bardhaman, WB, both fallingin the State of West Bengal. During the search, based on the volume of clearance, production report, and various other documents recovered in factory premises, preliminary estimate of duty evasion on account of misclassification of DGS to the tune of 4.7 Cr was detected in IFB Agro Industries Ltd. Further investigation is underway.