2020 (7) TMI 809 - AAR - GST

Maintainability of Advance Ruling application - Classification of goods - Flavoured Milk - What is the appropriate chapter under the customs Tariff Act 1975 (51 of 1975) under which the product Flavoured Milk can be classified as per the explanation (iv) of the Notification No. 1/2017-Central Tax (Rate) dated 28th June 2017? - HELD THAT - The Directorate General of GST Intelligence Visakhapatnam Zonal Unit had informed that an investigation had already been initiated against the same issue through summons dated 07-11-2019 for mis-classification of flavoured milk under HSN 0403 instead of HSN 2202 in his letter numbered F.No. DGGI/VZU/INV/GST/104/2019 dated 24-02-2020 requesting for rejection of the applicant s plea for admission for advance ruling in terms of provisions of sub-section (2)of section 98 of CGST Act 2017. This authority after examining the relevant proviso to sec 98(2) makes the observation that it is a fit case for rejection as the applicant approached the Authority for Advance Ruling for clarification while the case is still pending with the Revenue on the same issue i.e. with respect to the classification of the product under question.

Summary

Issues:
Classification of the product "Flavoured Milk" under the Customs Tariff Act, 1975.

Analysis:
The application was filed under the Central Goods & Services Tax Act and Andhra Pradesh Goods & Services Tax Act by a company primarily engaged in processing and marketing dairy products, including flavoured milk. The applicant sought clarification on the appropriate chapter under the Customs Tariff Act for classifying flavoured milk. The National Dairy Research Institute confirmed that flavoured milk falls under dairy produce. The applicant argued that flavoured milk should be classified under chapter 4, heading 04029990, with a 5% tariff rate, as it is a milk-based product. The applicant referenced the Gujarat High Court judgment stating that flavoured milk is essentially milk, supporting their classification argument.

The applicant contended that flavoured milk should not be classified under chapter 22, as it deals with beverages containing milk, and flavoured milk does not contain alcohol. The applicant provided a breakdown of the components in flavoured milk, highlighting that milk constitutes 90.96% of the product, supporting the classification under chapter 4. The applicant's representative reiterated these arguments during a personal hearing.

However, the Revenue raised a plea stating that an investigation was initiated against the mis-classification of flavoured milk. The Revenue requested the rejection of the applicant's plea for an advance ruling, citing that the issue was already pending with them. The Authority, considering the proviso to section 98(2) of the CGST Act, decided not to admit the application due to the ongoing investigation by the Revenue on the classification of flavoured milk. Therefore, the application was rejected by the Authority.

In conclusion, the Authority did not admit the application for an advance ruling on the classification of flavoured milk under the Customs Tariff Act, 1975, as the issue was already under investigation by the Revenue.