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2021 (1) TMI 1194 - AAR - GSTClassification of goods - GST rate - Popcorn - applicability of N/N .01/2017-Central Tax (Rate) dated 28.06.2017 amended till date - HELD THAT - It is observed that the product in question i.e. 'POP CORN' is manufactured from maize corn by heating in an electric kettle and due to the heat of kettle, they turn into puffed corns/popcorns and then to make it palatable other ingredients like salt and turmeric powder are added to it and a negligible quantity of oil is also used for the purpose of sticking the salt and turmeric on the maize/corn. Thus it is a ready to eat prepared food and fits the description as 'Prepared foods obtained by the roasting of cereal'. This description attracts classification under Chapter Sub-Heading 1904 10 of the First Schedule to the Customs Tariff Act, 1975. Since it is not Corn flakes (tariff item 1904 10 10), Paws, Mudi and the like (tariff item 1904 10 20) or Bulgur wheat (tariff item 1904 10 30), it will fall under the residual tariff item 1904 10 90 of the First Schedule to the Customs Tariff Act, 1975. The HSN code of the product namely Popcorn is 19041090 attracting rate of tax @ 9% each under Central and State Tax (cumulatively 18%) as per Sl. No. 15 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 , as amended.
Issues Involved:
1. Classification of 'Popcorn' under the appropriate HSN code. 2. Determination of the applicable GST rate for 'Popcorn'. Detailed Analysis: 1. Classification of 'Popcorn' under the Appropriate HSN Code: The applicant, an individual planning to start a business of manufacturing and selling flavored 'Popcorn' under the brand name 'Yo Popcorn', sought an advance ruling on the classification and GST rate applicable to their product. The raw materials for 'Popcorn' include maize corn, edible oil, salt, and various seasonings. The production process involves heating the mixture to produce ready-to-eat popcorn. The applicant argued that 'Popcorn' should be classified under HSN 2106, which covers miscellaneous edible preparations. They cited various judicial precedents, including the Supreme Court's ruling in Commissioner of Central Excise, Pune-III v. M/s Frito Lay India, which held that products involving additional ingredients beyond mere swelling or roasting of cereals should not fall under HSN 1904 but under HSN 2106. The applicant further emphasized that 'Popcorn' is not merely a product of swelling or roasting cereals but involves additional processes and ingredients, making it distinct from items like corn flakes. They also referenced the common parlance theory, suggesting that 'Popcorn' is commonly understood as a snack similar to 'namkeen' and should be classified under HSN 2106. However, upon examination, the Authority for Advance Ruling (AAR) noted that 'Popcorn' is prepared by heating maize corn, which turns into puffed corn. Additional ingredients like salt and turmeric are added, and a negligible amount of oil is used for sticking these seasonings. The AAR concluded that 'Popcorn' fits the description of "Prepared foods obtained by the roasting of cereal" under Chapter Sub-Heading 1904 10 of the First Schedule to the Customs Tariff Act, 1975. Consequently, 'Popcorn' was classified under tariff item 1904 10 90. 2. Determination of the Applicable GST Rate for 'Popcorn': The AAR referred to Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 for determining the GST rate. They observed that although there is no specific entry for 'Popcorn' in the notification, an entry under Chapter Heading 1904 at Sr. No. 15 of Schedule III closely matches the product and process. This entry covers items like corn flakes, bulgar wheat, and prepared foods obtained from cereal flakes, excluding certain specific items like puffed rice (muri) and flattened rice (chira). Based on this classification, the AAR ruled that 'Popcorn' falls under HSN code 19041090 and attracts a GST rate of 9% each under Central and State Tax, cumulatively amounting to 18%, as per Sl. No. 15 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. Conclusion: The AAR concluded that the appropriate classification for 'Popcorn' is under HSN code 19041090, and the applicable GST rate is 18% (9% CGST and 9% SGST). This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh, subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.
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