2019 (8) TMI 1566 - AAAR - GST

Classification of goods - HSN Code - Branded Frozen Chicken supplied in a unit container - classifiable under HSN Code 0207 12 00 or not - exemption under Entry No. 9 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 - Challenge to AAR decision - HELD THAT - The carcass of the chicken falling under Heading 0207 to be supplied by the appellant is not in merely fresh or chilled condition. Admittedly, the carcass of the chicken is to be supplied in frozen state and therefore, the same satisfies the first requirement of leviability of GST on it - each dressed chicken (broiler) carcass subsequent to chilling and before freezing is individually packed in a primary package colourless LDPE bag and then it is put in a secondary package (HDPE Bag) and both primary and secondary packages bear the brand name Gitwako . This is accepted by the appellant also, in its submissions. Accordingly, the packages of supply meet the requirement of bearing a registered brand name. For any package (irrespective of size, nature and shape) to be a unit container, only criteria needs to be fulfilled is that it should be designed to hold a predetermined quantity or number, which is indicated on the package. The above definition nowhere specifies size, shape or nature of packages to cover the same under the scope of the phrase unit container . The size, shape and nature of packages depend upon various factors including type of goods to be packed. Further, we find no such restriction that unit container should carry a same quantity in each and every case - the notification does not impose condition that after putting the goods in unit containers, the supply should also be in the same form i.e. in unit containers. The instant case involves supply of packaged Branded Frozen Chicken which is an item obtained out of live bird. Looking to the fact that weight of individual Frozen Chicken may vary depending upon various factors such as natural weight of the bird in living condition and weight obtained after dressing etc., the weight of supply in different packages vary according to the number of the chickens, who may have different individual weight, supplied in such packages. Hence, packages of supply in the instant case may carry weight which may vary in a certain range due to peculiarity of the item of supply and conditions in which the item is supplied - weight in Kgs. cannot be the primary and only determinant of unit quantity because emphasis has been laid on supply of chicken in natural shape which naturally has to be quantified primarily in numbers. Number of chicken supplied being the primary determinant the weight of such supply can vary according to the weight of live bird and other relevant factors and, therefore the weight of supply in the secondary packing, though pre-determined, has to be specified in a range suitable for accommodating the weight of the birds. In any case, range of weight also happens to be a predetermined quantity and the said range combined with the one number of chicken put up in the primary package can be taken to be predetermined quantity put up in a unit container. Whole frozen chicken is being packed by the appellant in individual LDPE bag in predetermined quantities (one in number) and then it is put in a secondary package (HDPE Bag) for supply, we find that such supplies are in the nature of supply in unit containers. Thus, the requirement of phrase unit container , as laid down in the aforesaid Explanation to the Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 (as amended) is satisfied and therefore, the goods supplied by the appellant to the Indian Army, are not exempted under Entry No. 9 of the Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 (as amended). Frozen Chicken packed by the appellant in individual LDPE bag in predetermined number (one in number) and supplied to the Indian Army and Paramilitary forces in the HDPE bags is leviable to GST in terms of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 (as amended) and exemption from the levy of GST under Entry No. 9 of the Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 (as amended) is not available to such supplies.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Classification of HDPE bags as unit containers.
3. Determination of whether the frozen chicken is exempt from GST under Entry No. 9 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017.

Issue-wise Detailed Analysis:

1. Condonation of Delay:
The first issue concerns the delayed filing of the appeal under Section 100(2) of the CGST Act. The prescribed time limit of 30 days ended on 26-5-2019, but the appeal was submitted electronically on 12-6-2019 and physically on 17-6-2019, resulting in a delay of 17 days. The appellant attributed the delay to the time taken by the Accounts Department of the Army in clarifying the GST levy on chilled/frozen meat products. The Appellate Authority condoned the delay, considering the circumstances beyond the appellant's control, and admitted the appeal for final disposal on merits.

2. Classification of HDPE Bags as Unit Containers:
The appellant contested the classification of HDPE bags as unit containers. They argued that the packaging did not qualify as unit containers since the weights of the frozen chicken varied and were not predetermined. The definition of a unit container, as per Notification No. 1/2017-C.T. (Rate), dated 28-6-2017, requires a package designed to hold a predetermined quantity or number, indicated on the package. The appellant's packaging did not indicate a predetermined quantity, and the weights varied from one package to another. The appellant cited various case laws to support their argument that the packaging used did not meet the criteria of unit containers.

3. GST Exemption Status:
The appellant sought clarification on whether the frozen chicken sold in packaged form was exempt from GST under Entry No. 9 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017. The Rajasthan Advance Ruling Authority had classified the branded frozen chicken under HSN Code 0207 12 00 and ruled that it was not exempt from GST. The appellant argued that the packaging did not qualify as unit containers and, therefore, should be exempt under the said notification.

Detailed Findings:

Condonation of Delay:
The Appellate Authority found the reasons for the delay satisfactory and condoned the delay, allowing the appeal to be considered on its merits.

Classification of HDPE Bags as Unit Containers:
The Appellate Authority examined the definition of unit containers and the appellant's packaging process. It was found that each dressed chicken carcass was individually packed in LDPE bags and then placed in HDPE bags. The primary packages contained a predetermined quantity (one chicken), and the secondary HDPE bags were designed to hold a predetermined quantity. The Authority concluded that these packages met the criteria of unit containers as defined in the notification.

GST Exemption Status:
The Appellate Authority upheld the Rajasthan Advance Ruling Authority's decision, stating that the branded frozen chicken packed in individual LDPE bags and supplied in HDPE bags was subject to GST. The goods were classifiable under HSN Code 0207 12 00 and did not qualify for exemption under Entry No. 9 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017.

Conclusion:
The appeal was rejected, and the Advance Ruling dated 22-4-2019 was upheld. The supply of branded frozen chicken packed in individual LDPE bags in predetermined quantities (one in number) and supplied in HDPE bags was classified as supply in unit containers and not exempt from GST under the relevant notification.