2019 (5) TMI 1073 - AAR - GST

Classification - rate of tax - Frozen Chicken sold in packaged form - Whether frozen chicken as sold by the company is exempt under Entry No. 9 of Notification No. 02/2017-CT(R)? - HELD THAT - Frozen chicken in meat form is covered under Chapter 2 of Section I heading Live Animals, Animal Products of Customs tariff Act, 1975 - The gallus domesticus is a technical name for chicken and is type of domesticated fowl. Thus frozen meat of chicken is covered under entry 0207 of the Customs tariff Act, 1975. The carcass of the chicken supplied by the applicant in a HDPE bag is frozen and is also branded thus fulfills two of the three necessary conditions. The same has also been accepted by the applicant in his submissions - As such for the purpose of applicability of GST, the only contention left to be ascertained is whether the HDPE bag used by the applicant for supply of goods qualifies as a unit container. The HDPE bags are designed to hold a predetermined quantity or number, so as to carry carcass weighing between 10 to 20 kgs, as is evident from the document submitted by the applicant i.e. Specification No. 209D of Defence Food Specifications-2016, Secretariat of the Technical Standardiation Committee (Food Stuffs) (Directorate general of Supplies and transport) - After the goods are packed in the HDPE bags, the actual weight is mentioned on each bag before the supply of goods, which is also evident from the remark printed on the bags (sold on actual weight basis). Thus it is clear that the goods supplied in the HDPE bags are of predetermined quantity hence qualifies to be a unit container. The supply of goods by the applicant fulfill the conditions mentioned in Notification No. 01/2017 dated 28.06.2017 (as amended from time to time) i.e. goods are branded, frozen and supplied in a unit container and will attract GST @5% (CGST 2.5% SGST 2.5%).

Summary

Issues:
Classification of frozen chicken sold in packaged form and its HSN Code.
Applicability of exemption under Entry No. 9 of Notification No. 02/2017-CT(R).

Analysis:
The applicant, a private limited company, sought advance ruling on the classification and exemption of frozen chicken supplied to Indian Armed forces. The company processes carcasses into individual packages, then into HDPE bags, and delivers in refrigerated vans. The jurisdictional officer argued against tax exemption due to predetermined packing. The applicant's submissions highlighted the detailed process and branding of the product.

The frozen chicken falls under Chapter 2 of the Customs Tariff Act, classified as meat of poultry under entry 0207. Notification No. 01/2017 and subsequent amendments specified GST rates for frozen poultry meat. Unbranded chicken in unit containers is exempted under Notification No. 02/2017. The HDPE bags used by the applicant were analyzed for compliance with unit container definition.

The ruling determined that the branded frozen chicken in unit containers is classified under HSN Code 02071200 and is not exempt under Entry No. 9 of Notification No. 02/2017-CT(R). The decision was based on the fulfillment of conditions in the notifications, including branding, freezing, and packaging in a unit container, attracting GST at 5%.

This comprehensive analysis addressed the issues raised by the applicant regarding the classification and tax exemption of frozen chicken supplied to defense forces, providing clarity on the applicable regulations and their implications on the company's operations.