2018 (7) TMI 1333 - AAR - GST

Levy of GST - Unit container - packing being considered as unit container or not? - Sheep/goat meat in carcasses of different weight and size in frozen Slate and similarly whole chicken of different weight and size is also supplied in frozen State to Army - case of applicant is that the dispatches made by them in LDPF/HDPE bags, both primary well as secondary packing do not qualify as unit container and therefore their product is not leviable to tax under GST. Held that - The items mentioned in tariff heading 0204 or 0207 other than fresh or chilled would be exigible to tax @ 5% if these are put up in a unit container and bears a brand name or bears a brand name on which actionable claim or enforceable right in court of law is available other than those where any actionable claim or enforceable right in respect of such brand name has been forgone voluntarily , subject to conditions as in the annexure I to the said notification - Correspondingly, in exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Service Tax Act, 2017, the Central Government vide notification no. 2/2017-lntcgraled Tax (rate) New Delhi dated 28.06.2017 has exempted, Inter-State supplies of goods, from the whole of the Integrated tax leviable thereon. In the present case, the packing of the frozen carcasses and chicken done by them is only a medium of delivery and since these are not in pre-determined units, these packing cannot be termed as Unit Containers - the packaging of frozen sheep/goat carcasses and frozen chicken for delivery in primary LDPE bags further packed in secondary HDPE bags or non-standardised quantity done by the applicant cannot be regarded as Unit Container since it is not standardised to hold a uniform pre-determined quantity. Ruling - The whole (sheep/goat) animal carcass in frozen state/whole chicken in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE hags having mention of varying actual total weight of the carcasses packed in each such HDPE bags and supplied to Army Shall not quality as product put up in unit Container . The products as mentioned at (a) and (b) above fall under exemption list as per entry no. 10 and 13 of N/N. 2/2017-lntegrated tax (Rate) dated 28th June 2017 upto 14th November 2017 and thereafter as per entry No. 9 of N/N. 44/2017- Integrated Tax (Rate) dated 14th November 2017.

Summary

Issues Involved:
1. Classification of the product under HSN codes 0204 and 0207.
2. Determination of whether the packaging qualifies as a "unit container" under GST law.
3. Applicability of GST rates and exemptions on the product based on the packaging.

Issue-wise Detailed Analysis:

1. Classification of the product under HSN codes 0204 and 0207:
The applicant, M/s. AOV Agro Food Pvt. Ltd., is engaged in the slaughtering and processing of poultry, sheep, and goat meat, supplying these products to both domestic and export markets, including the Army. The products in question are classified under HSN code 0204 for meat of sheep/goat and HSN code 0207 for meat and edible offal of poultry.

2. Determination of whether the packaging qualifies as a "unit container" under GST law:
The primary issue is whether the applicant's packaging methods qualify as "unit containers," which would affect the GST rate applicable to their products. The applicant argues that their products are not packed in unit containers as defined by the GST law, which describes a unit container as a package designed to hold a pre-determined quantity or number, indicated on the package. The applicant’s method involves placing frozen carcasses and whole chickens in LDPE bags (primary packing) without sealing or indicating weight, and then placing these LDPE bags in HDPE bags (secondary packing) with manually marked weights.

The Deputy Excise & Taxation Commissioner (ST) contends that the applicant's goods, packed in bags, qualify as being in unit containers, thus attracting GST.

3. Applicability of GST rates and exemptions on the product based on the packaging:
From 1st July 2017 to 14th November 2017, products under chapter headings 0204 and 0207, if frozen and put in unit containers, were taxable at 12% GST. From 15th November 2017 onwards, the same products, if frozen, put in unit containers, and bearing a registered brand name or a brand name with an actionable claim, were taxable at 5% GST.

The applicant's position is that their packaging does not meet the definition of "unit containers," and therefore, their products should not be subject to GST. They cite case laws, including CCE vs. Shalimar Super Foods and Surya Agro Oils Ltd. vs. CCE, Indore, to support their argument that their packaging does not constitute unit containers as it does not hold a pre-determined quantity.

Discussion and Findings:
The Authority for Advance Rulings examined the definitions and case laws cited. They concluded that the applicant's packaging does not qualify as unit containers because the packages do not hold a pre-determined quantity or number. The packaging is not standardized and varies in weight.

Advance Ruling:
(a) The whole sheep/goat carcass in frozen state, packed in LDPE bags without a specified weight, and further packed in HDPE bags with varying actual weights, supplied to the Army, does not qualify as a product put up in "unit containers."
(b) The whole chicken in frozen state, packed in LDPE bags and then in HDPE bags with varying actual weights, supplied to the Army, does not qualify as a product put up in "unit containers."
(c) These products fall under the exemption list as per entry no. 10 and 13 of notification No. 2/2017-Integrated Tax (Rate) dated 28th June 2017 up to 14th November 2017, and thereafter as per entry No. 9 of Notification No. 44/2017-Integrated Tax (Rate) dated 14th November 2017.

Ordered accordingly.