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2021 (6) TMI 1107 - AAAR - GSTClassification of goods - PAPAD of different shapes and sizes manufactured/ supplied by the appellant - tariff heading/HSN Code - Applicable rate of GST - HELD THAT - Though, traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irrespective of their shape and sizes - As submitted by the appellant, when the consumer desires to eat the said products of the appellant, the said products are required to be fried or roasted before consumption. Thus, these products are not meant to be eaten without frying or roasting - The products under consideration become crispy when these products are fried or roasted. The products of the appellant has found its use as an alternative to regular round shaped Papad or as an additional variety of Papad in the Indian meal, especially the meals served during the community functions. The caterers, who prepare the meals for the community functions, as well as the people in general, consider such products as a different type or variety of Papad only - applicant s products of different shapes and sizes of papad, whose pictures are reproduced, are nothing but Papad, classifiable under Tariff Item 1905 90 40 of the Customs Tariff Act, 1975. Would it be judicious to stick that the product which are having Round shape, manufactured by using ingredient of cereal flour only are PAPAD and the products having the same characteristic and uses but shape and size is different cannot be termed as PAPAD ? - HELD THAT - Reliance can be placed in the case of M/S. SHIV SHAKTI GOLD FINGER VERSUS ASSTT. COMMISSIONER, COMMERCIAL TAXES, JAIPUR 1996 (5) TMI 419 - SUPREME COURT where it was held that irrespective of the shape of PAPAD and irrespective of ingredients used, the PAPAD still remains PAPAD - the decision is squarely applicable in the instant case as such the impugned product having different shapes and size PAPAD as compared to round shape Papad however are similar to Papad in respect of the ingredient, manufacturing process and use. Further, in entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017, the description of the product is PAPAD by whatever name called . To understand the term whatever name called the principle of Noscitur a sociis is to be applied. As per the said principle, the meaning of an unclear word or phrase must be determined by the words that surround it. In other terms, the meaning of a word must be judged by the company that it keeps. Therefore, in this entry, only a product called by name of PAPAD would not be covered but all types of product which are similar to PAPAD in respect of ingredient, manufacturing process, use and common parlance would be covered irrespective of their shape and size and even name. As such, the appellant s product is similar to the traditional round shaped Papad in all respect - the impugned product i.e. different shapes and sizes of papad is eligible to be covered under entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017. The rule of interpretation for classification is that when a product is eligible to be classified under specific entry then classification under general entry should not be preferred. It is found that in the case at hand, the product different shapes and sizes Papad is Papad of different shapes and size and find specific entry at CTH No. 19059040, therefore as per rule of interpretation, the product is to be classified under CTH No. 19059040 only and not under CTH No. 21069099 of the Customs Tariff Act, 1975 as classified by the GAAR. The product different shapes and sizes Papad involved in the present case merit classification under Tariff heading No. 19059040 of the Customs Tariff Act, 1975. It is already held that the product in question is classifiable under CTH No. 1905 of the Customs Tariff Act, 1975, the said CTH No. 1905 is covered under entry No. 96 of Notification No. 02/20178-CT (Rate) dated 28.06.2017 and accordingly chargeable to NIL rate of Goods and Services Tax.
Issues Involved:
1. Classification of "Papad" of different shapes and sizes. 2. Applicable GST rate for the product. Detailed Analysis: 1. Classification of "Papad" of Different Shapes and Sizes: The appellant is engaged in manufacturing and trading "Papad" in various shapes and sizes, which are not fully cooked or ready to eat and require frying or roasting before consumption. The appellant claims their product should be classified under Chapter Tariff Heading 1905 of the Customs Tariff Act, 1975, which exempts it from GST according to Entry No. 96 under Notification No. 02/2017-CT (Rate) dated 28.06.2017. The Gujarat Authority for Advance Ruling (GAAR) initially ruled that the product should be classified under Heading 2106, which covers "Un-fried Fryums" and attracts an 18% GST rate. GAAR reasoned that in common parlance, the appellant’s product is known as "Fryums" rather than "Papad," and thus, should be classified differently. Upon appeal, the Appellate Authority for Advance Ruling (AAAR) considered the ingredients, manufacturing process, and common parlance test. The AAAR noted that the main ingredients of the appellant's product are similar to traditional "Papad" and that the manufacturing process involves mixing ingredients, preparing dough, and shaping it using different dies. The AAAR emphasized that the shape of the product does not determine its classification; instead, the ingredients, manufacturing process, and common parlance are decisive factors. The AAAR referred to several judicial precedents, including the Supreme Court's ruling in Shiv Shakti Gold Finger vs. Assistant Commissioner, Commercial Tax, Jaipur (1996) and Karnataka High Court's decision in State of Karnataka vs. Vasavamba Stores (2013), which held that products similar to "Papad," irrespective of their shapes and sizes, should be classified as "Papad." The AAAR concluded that the appellant’s product, despite being known by different names in various regions (e.g., "Fryums"), is essentially "Papad" due to its ingredients, manufacturing process, and use. Therefore, the product should be classified under Tariff Heading 1905 90 40 of the Customs Tariff Act, 1975. 2. Applicable GST Rate for the Product: The AAAR examined Entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017, which exempts "Papad, by whatever name it is known, except when served for consumption" from GST. The AAAR applied the principle of "Noscitur a sociis," meaning that the meaning of an unclear word or phrase must be determined by the words that surround it. Considering the similarity in ingredients, manufacturing process, and use, the AAAR held that the appellant’s product qualifies as "Papad" under Entry No. 96 and is thus exempt from GST. Conclusion: The AAAR modified the GAAR's ruling and held that the appellant’s product "different shapes and sizes Papad" merits classification under Tariff Heading 1905 90 40 of the Customs Tariff Act, 1975, and is chargeable to NIL rate of GST as per Entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017.
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