2019 (1) TMI 360 - AAR - GST

Classification of goods - mouth fresheners (after mixing Kharak, Khopra, Sugar, Saunf, Mishri, fennel, Dates, Saccharin, menthol, Papaya fruit, or natural flavouring substances) - whether classifiable under chapter heading 2106 of HSN as Miscellaneous Edible Preparations not elsewhere specified or included chargeable at 18% GST or under Chapter 20 i.e. Preparations of Vegetable, fruit, nuts or other parts of plants and taxable at 12% GST? Held that - The Applicant has been clearing/selling/supplying the impugned product under Chapter 21016 since long, i.e. much prior to roll out of GST with effect from 01.07.2017 - while the impugned product was being classified under Chapter Head 2106 of the erstwhile Central Excise Tariff Act 1985, there is neither any change in ingredients nor any change in manufacturing process. To be precise, the impugned product remains the same in GST regime with no change from pre-GST regime. The solitary reason for the Applicant in moving instant application, as we could gather from the contents of the application, appears to be alleged divergent practice of classification of similar products of some other manufacturers. Be that as it may, nothing concrete has been brought on record by the Applicant that would necessitate review of already established classification of the impugned product of the Applicant. Ruling - The product Mouth freshener as described in the Application will merit classification under Chapter Heading 2106 of the GST Tariff as Food preparations not elsewhere specified or included and would be chargeable to GST at applicable rate under the said tariff entry, presently read with Notification No.01/2017-Central Tax (Rate) dtd.28.06.2017 and the corresponding notification under MPGST Act 2017 (Sr. No.23 to Schedule III).

Summary

Issues:
Classification of goods under GST - Chapter 21 or Chapter 20 - Tax rate disparity.

Analysis:
The applicant, engaged in manufacturing mouth fresheners, sought clarification on the classification of their product under the GST regime. The applicant contended that their product, classified under Chapter 2106, attracted GST at 18%, while similar products by other manufacturers were classified under Chapter 20, attracting GST at 12%. The department viewed the product as falling under Chapter 2106. During the personal hearing, the applicant reiterated their submissions. The Authority found the issue fell under Section 97(2)(a) of the CGST Act 2017 and MPGST Act 2017, related to the classification of goods, and admitted the application for consideration.

The Authority noted that the applicant had been classifying the product under Chapter 2106 both before and after the GST rollout, with no change in ingredients or manufacturing process. The applicant's claim of alleged divergent practices in classification by other manufacturers was not substantiated with concrete evidence. Emphasizing the Harmonised System of Nomenclature, the Authority stated that a commodity should have consistent classification under both pre-GST and GST regimes. As there was no change in the product, the Authority upheld the classification under Chapter 2106, attracting GST at 18%.

In the ruling, the Authority declared that the product, described as mouth freshener, would be classified under Chapter 2106 of the GST Tariff as 'Food preparations not elsewhere specified or included' and subject to GST at the applicable rate under the said tariff entry. The ruling was deemed valid unless declared void under the provisions of the GST Act.