2020 (12) TMI 1297 - AAR - GST

Classification of goods - rate of GST - Namkeen - use of unregistered brand, name, symbol etc - CSH/HSN Code alongwith applicable Tax rate of the final product namely Extruded raw stick - HELD THAT - Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only. Taking all these aspects into consideration, the product 'raw extruded stick' is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 issued under the CGST Act, 2017, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods falling under Heading 2106. The product raw extruded stick is not ready for consumption and the same has to be fried before consumption. Therefore, Goods and Service Tax rate of 18% (CGST 9% GGST 9% or IGST 18%) is applicable to the product 'raw extruded stick' as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) slated 28.06.2017, as amended, issued under the CGST Act, 2017 issued under the GGST Act, 2017. If the applicant voluntarily forego their actionable claim or enforceable right on brand name on the final product namely Namkeen in the manner as prescribed under the Notification No. 01/2017-CT(Rate) dated 28.06.2017, the applicable rate of Central Tax and State Tax would be 2.5% each (cumulatively 5%) - The CSH/HSN code of the Final Product namely Extruded raw stick is 21069099 attracting rate of tax @ 9% each under Central and State Tax.

Issues Involved:
1. Applicable CGST & SGST Tax rate on "Namkeen" after fulfilling the conditions for disclaimer, use of unregistered brand, name, symbol, etc.
2. CSH/HSN Code and applicable Tax rate of the final product "Extruded raw stick."

Issue-wise Detailed Analysis:

1. Applicable CGST & SGST Tax rate on "Namkeen" after fulfilling the conditions for disclaimer, use of unregistered brand, name, symbol, etc.:

The applicant, a manufacturer of "Namkeen," sought clarification on the applicable tax rate under the conditions of using an unregistered brand name and disclaimer. The applicant currently sells "Namkeen" in printed pouches with an MRP ranging from ?1/- to ?5/-, billing it at 12% GST. They plan to introduce a disclaimer on each retail pack, voluntarily foregoing any actionable claim or enforcement right in respect of the brand name, and will not use any registered trademark or symbol.

The Authority referred to Notification No. 34/2017-Central Tax (Rate) dated 13.10.2017, which allows a reduced tax rate if the brand name is voluntarily foregone. The notification specifies that "Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form" without a registered brand name or actionable claim are subject to a 5% GST rate (2.5% CGST + 2.5% SGST).

The applicant's compliance with the conditions of the notification, including filing an affidavit and printing the disclaimer on the unit containers, qualifies them for the reduced tax rate. Consequently, the applicable rate of Central Tax and State Tax for "Namkeen" would be 2.5% each, cumulatively 5%.

2. CSH/HSN Code and applicable Tax rate of the final product "Extruded raw stick":

The applicant also sought the classification and tax rate for "Extruded raw stick," which is made from corn, rice grits, etc., and packed in loose bags without any brand but containing the manufacturer's details. The product becomes similar to "kurkure" when fried.

The Authority examined the relevant tariff headings and chapter notes. Chapter Heading 2106 covers "Food preparations not elsewhere specified or included." Specifically, Tariff Item 2106 90 99 includes products like "Namkeens," "Mixtures," and similar edible preparations.

The Authority concluded that the "raw extruded stick" falls under Tariff Item 2106 90 99. However, since the product is not ready for consumption and requires frying before consumption, it does not fall under the category of ready-to-eat "Namkeens." Therefore, it is subject to an 18% GST rate (9% CGST + 9% SGST) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended.

Ruling:

1. Namkeen: If the applicant voluntarily foregoes their actionable claim or enforceable right on the brand name in the prescribed manner, the applicable rate of Central Tax and State Tax would be 2.5% each, cumulatively 5%.

2. Extruded raw stick: The CSH/HSN code is 21069099, attracting a tax rate of 9% each under Central and State Tax, cumulatively 18%.

This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and 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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