2020 (1) TMI 977 - AAR - GST

Classification of goods - Fried Fryums of different shapes, sizes and varieties which are ready to eat - applicable HSN code and GST rate - HELD THAT - Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. In 5(b) above preparation for use after processing has been included and mentioned therein such as cooking, dissolving or boiling in water, milk or other liquids - Obviously, the term such as is purely illustrative but not exhaustive and therefore processing includes frying also, hence fried goods are also covered under chapter head 2106 which is ready for human consumption. Further, Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only. Thus, the product Fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of issued under the CGST Act, 2017 and corresponding N/N. 1/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods falling under Heading 2106. Therefore, Goods and Service Tax rate of 18% is applicable to the product Fried Fryums as per Sl. No. 23 of Schedule III of N/N. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate) dated as amended, issued under the GGST Act, 2017 or IGST Act, 2017.

Summary

Issues Involved:
1. Classification of Fried Fryums.
2. Applicable Harmonized System of Nomenclature (HSN) Code.
3. Applicable Goods and Services Tax (GST) rate.

Detailed Analysis:

1. Classification of Fried Fryums:
The primary issue is the classification of Fried Fryums under the GST regime. The applicant, M/s. Alisha Foods, contends that Fried Fryums should be classified as "Papad" under tariff item 1905 90 40. The applicant argues that Fried Fryums are similar to Papad in commercial parlance and should be treated as such for tax purposes. However, the concerned officer and the Advance Ruling Authority (ARA) disagree with this classification.

2. Applicable Harmonized System of Nomenclature (HSN) Code:
The applicant suggests that Fried Fryums fall under HSN code 1905 90 40, which pertains to Papad. The ARA, however, refers to the Customs Tariff Act, 1975, and relevant notifications to determine the correct classification. The ARA concludes that Fried Fryums do not fit the description of Papad as understood in common parlance and judicial precedents. Instead, the ARA refers to Chapter Note 5 and 6 of Chapter 21, which cover edible preparations not elsewhere specified or included, and concludes that Fried Fryums should be classified under Tariff Item 2106 90 99.

3. Applicable Goods and Services Tax (GST) Rate:
Based on the classification under Tariff Item 2106 90 99, the ARA determines the applicable GST rate. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, covers "Food preparations not elsewhere specified or included" under Heading 2106. This includes products like Fried Fryums. Therefore, the applicable GST rate is 18% (CGST 9% + SGST 9% or IGST 18%).

Ruling:
1. The product 'Fried Fryums' manufactured and supplied by M/s. Alisha Foods is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.
2. The applicable GST rate for 'Fried Fryums' is 18% (CGST 9% + SGST 9% or IGST 18%) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended.
3. This ruling is valid subject to the provisions under section 103(2) until and unless declared void under Section 104(1) of the GST Act.

Conclusion:
The ARA's decision clarifies that Fried Fryums are not classified as Papad and should be classified under Tariff Item 2106 90 99, attracting an 18% GST rate. The ruling is based on the interpretation of relevant statutes and judicial precedents, ensuring that the classification aligns with common parlance and legal principles.