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2020 (5) TMI 284 - AAAR - GSTClassification of goods - carbonated fruit juices - classified as Fruit Juices or aerated drinks? - challenge to AAR decision - AAR has ruled that The products Richyaa Darner Lemon and Licta Lemon to be supplied by the applicant are classifiable under CTH 22021020 and all others i.e. Richyaa Darner Cola , Licta Cola , Richyaa Darner Jeera Soda , Licta Jeera Masala , Richyaa Darner Orange and Licta Orange are classifiable as Other under CTH 22021090. HELD THAT - The issue of classification of the products similar to that in the case at hand has been dealt with by the committee of Secretaries, Fitment Committee in the GST Regime. Discussions in the GST Council meeting though not controlling, has persuasive value. The observation of the Fitment Committee, which recommended for no change in the prevailing rates under Annexure-III of their recommendations placed for consideration by the GST Council during the 37th Council Meeting - GST Council has agreed to the recommendation holding that From item No. 43 to 57 of Annexure-III, the Council had no objection and approved the recommendation or Fitment Committee. The Hon ble Minister from Uttar Pradesh raised the issue about item at Si. No. 58 of Annexure III i.e. Extra Neutral Alcohol (ENA). The above decision of the GST Council also supports the classification ruled by the Lower Authority - there are no reason to interfere with the Order of the Advance Ruling Authority in this matter. Appeal dismissed.
Issues Involved:
1. Classification of carbonated fruit juices under GST. 2. Applicability of FSSAI regulations and food categorization. 3. Interpretation of Customs Tariff Headings (CTH) 2202 and 2009. 4. Common parlance test and industry practice. 5. Fitment Committee recommendations and GST rates. Detailed Analysis: 1. Classification of Carbonated Fruit Juices under GST: The appellant, a manufacturer of fruit juices and carbonated fruit juices, sought a ruling on whether carbonated fruit juices fall under "Fruit Juices" or "Aerated Drinks." The original authority classified the products under CTH 22021020 and 22021090, which was contested by the appellant. The appellant argued that their products should be classified under Tariff Item 22029920 as "Fruit Juice Based Drinks," relying on FSSAI regulations and Supreme Court judgments. 2. Applicability of FSSAI Regulations and Food Categorization: The lower authority considered FSSAI Regulations, specifically Regulation 2.3.30, which distinguishes between "Carbonated Fruit Beverages or Fruit Drinks" and "Carbonated Beverages with Fruit Juice." The appellant's products, with 2.5% lime juice and 5% orange juice, fall under "Carbonated Beverages with Fruit Juice" as per Para 3A of Regulation 2.3.30. The lower authority also referred to food category 14.1.4.1, which includes "Carbonated water-based flavoured drinks," concluding that the products are classifiable under CTH 22021020 or 22021090. 3. Interpretation of Customs Tariff Headings (CTH) 2202 and 2009: The Customs Tariff Heading 2202 includes non-alcoholic beverages, excluding fruit or vegetable juices of Heading 2009. The appellant accepted that their products are not classifiable under CTH 2009 but argued that they should fall under CTH 22029920 as "Fruit Juice Based Drinks." The lower authority, however, classified the products under CTH 220210, which covers aerated waters containing added sugar or other sweetening matter or flavoured. 4. Common Parlance Test and Industry Practice: The appellant contended that their products are marketed and understood by consumers as "Fruit Juice Based Drinks," not merely flavoured waters. They cited industry practices where similar products are classified under CTH 22029920. However, the lower authority's classification was supported by the larger bench decision in the case of Brindavan Beverages Pvt Ltd, which stated that beverages with less than 5% lime or lemon juice content classify as lemonade. 5. Fitment Committee Recommendations and GST Rates: The Fitment Committee's recommendations, discussed in the GST Council meeting, indicated no change in the prevailing GST rates for carbonated beverages with fruit juice, maintaining a 28% GST rate plus cess. This supported the lower authority's classification under CTH 220210. Conclusion: The appellate authority upheld the lower authority's classification of the appellant's products under CTH 22021020 and 22021090, rejecting the appeal. The products were found to be "Carbonated Beverages with Fruit Juice" and not "Fruit Juice Based Drinks" under CTH 22029920. The appeal was disposed of accordingly.
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