India’s tax law portal TaxScan.in reported this March that The Maharashtra Authority for Advance Rulings (AAR) declined from determining classification (HSN) of Tire Pyrolysis Oil and the tax rate applicable to it, by reason of non-submission of full details pertaining to composition of the impugned product by the applicant.

The order was passed in an application filed by Royal Carbon Black Pvt.Ltd., an entity engaged in the recycling of used tires. The application was preferred under Sec.97 of the Central Goods and Services Act and Maharashtra Goods and Services Act, for adjudicating upon the classification (HSN) of Tire Pyrolysis oil and the tax rate applicable to it.

As per the applicant, during the process of tire recycling (pyrolysis), the renewable rubber component alone of the tire is converted into Pyrolysis oil, which is received during the heating process and used as a liquid fuel. In the absence of specific schedule entry prescribed for the impugned oil under CGST, the applicant had approached the Maharashtra Authority for Advanced Hearing seeking to classify Pyrolysis Oil as biodiesel under HSN 3826 since it is derived from the rubber part of the tire, which is renewable in nature or alternatively to classify it as Marine fuel falling under HSN 2710 as its specifications meet that of Marine fuel.

In turn, the Jurisdictional Officer contended that Pyrolysis oil, widely used as industrial fuel to substitute furnace oil or industrial diesel, is made from inorganic sources and as the same is neither made of any vegetable oil or animal fat and the production process of Pyrolysis Oil does not involve any kind of distillation of any petroleum product, the same cannot be classified as biodiesel or Marine fuel.

Upon finding that the proper classification would require records showing the composition of Pyrolysis Oil, the Maharashtra Authority for Advanced Hearing, though directed the applicant to submit the same, no authentic test reports or other was produced by the applicant, apart from a general submission that the composition may vary depending upon the tire recycled. Thus, in the view of non-submission of records by the applicant, the Maharashtra Authority for Advanced Hearing, declined from classifying tire Pyrolysis Oil.