2019 (4) TMI 109 - AAR - GST

Classification of goods - fresh raw green pepper of genus Piper Nigrum - whether classifiable as a vegetable that merits classification under heading 0709 99 10 of Chapter 7 of the Customs Tariff Act, 1975 - rate of tax - Held that - The fresh raw green pepper imported and exported by the is not used as a condiment and unlike other spices, is not used in raw form to add flavour to food. Green pepper in hydrated form or frozen or dried form come under the heading 0904 11 50 - The vegetables in raw form containing substantial moisture contents are classified under Chapter 7. However, when the same is processed, dried or the moisture contents removed. then its character changes and would classify under chapter 9. Hence, it is stated that the raw pepper covered under classification 0709 99 10 being a vegetable, it does not merit classification as spices under classification 0904 of Chapter 9 of the Customs Tariff Act, 1975. Green pepper plucked from vine of a spice plant has no characteristics of spices. In common parlance. green pepper before its process is not Included in the category of spices . The spices are the group of vegetable rich in essential oils and aromatic principles, and when on account of their characteristic taste, are used as condiments. The aroma of spices and essential oil can be emerged from green pepper only after the processing of such produce. Therefore, the green pepper picked from the vine qualifies the classification under Chapter 7.

Summary

Issues: Classification of fresh raw green pepper under Customs Tariff Act, 1975 and applicable GST rate.

Classification of fresh raw green pepper under Customs Tariff Act, 1975:
The applicant sought an advance ruling on whether fresh raw green pepper of genus Piper Nigrum should be classified as a vegetable under heading 0709 99 10 of Chapter 7 of the Customs Tariff Act, 1975. The authorized representative argued that green pepper should be classified under this heading as it is not used as a condiment like other spices. The ruling authority examined the nature of green pepper and concluded that it qualifies as a vegetable under Chapter 7, as it lacks the characteristics of spices and essential oils until processed. The Customs, Excise & Service Tax Appellate Tribunal also supported this view, stating that green pepper is a vegetable, not a spice.

Classification as a spice under Customs Tariff Act, 1975:
In case the green pepper did not merit classification as a vegetable, the applicant inquired whether it could be classified as a spice under heading 0904 of Chapter 9. The ruling authority determined that if the green pepper undergoes processing to retain its natural green color and flavor, it would be classified under 0904 90 of Chapter 9. However, in its fresh raw form, it should be classified under Chapter 7 as a vegetable.

Applicable GST rate on sale or purchase of raw green pepper:
Regarding the rate of GST applicable on the sale or purchase of raw green pepper, the ruling authority clarified that the purchase or sale of green pepper picked from the vine is exempted under GST as per Entry at Sl No. 43 of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017. This exemption applies to the specific classification of green pepper as a vegetable under the Customs Tariff Act, 1975.

This judgment provides detailed analysis and clarity on the classification of fresh raw green pepper of genus Piper Nigrum under the Customs Tariff Act, 1975, emphasizing its categorization as a vegetable rather than a spice based on its characteristics and processing requirements. Additionally, the ruling outlines the applicable GST exemption for the sale or purchase of green pepper in its raw form, offering comprehensive guidance on the tax treatment of this specific product.