2026-VIL-206-AAR
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SGST Advance Ruling Authority

GST - Karnataka AAR - Classification of Cashew Nut Shell Liquid - Heading 1302 of Customs Tariff and Notification No. 09/2025-Central Tax (Rate) - The Applicant manufactures crude Cashew Nut Shell Liquid by extraction from cashew nut shells through heating and mechanical expulsion, and supplies it for industrial applications such as resins, coatings and friction materials - Applicant classified the product under Heading 1302 and contended that the concessional rate in the amended rate notification applies to the entire heading without restriction to any sub-heading - Whether Cashew Nut Shell Liquid is classifiable under Heading 1302 of the Customs Tariff and liable to GST at the concessional rate prescribed for that heading - HELD - The tariff item, sub-heading, heading and Chapter in the rate notification carry the same meaning as in the First Schedule to the Customs Tariff Act, 1975, and classification is determined on the nature and composition of the product, the degree of processing and the essential character - Chapter 08 covers only cashew nuts in natural or minimally processed form and does not cover a derivative extracted from the shell. Chapter 20 requires the product to be fit for human consumption, and the product is non-edible and used for industrial purposes. Chapter 15 covers edible oils, and the product contains toxic phenolic compounds and cannot be treated as edible oil. Heading 1302 specifically covers vegetable saps and extracts, and Tariff Item 1302 19 20 specifically covers Cashew Nut Shell Liquid, crude. The Explanatory Notes include cashew nutshell extract and exclude only its polymers under Heading 3911 - The product is obtained by mechanical and thermal extraction without chemical modification or polymerisation, so Heading 3911 is not applicable. Serial No. 74 of Schedule I to the rate notification refers to Heading 1302 without restricting it to any sub-heading, so it covers all goods falling under that heading, including the product - Cashew Nut Shell Liquid is classifiable under HSN 1302 19 20 and is liable to the 5% GST rate prescribed under Serial No. 74 of Schedule I to Notification No. 9/2025-Central Tax (Rate), effective from 22.09.2025 – Ordered accordingly
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