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2020 (6) TMI 481 - AAR - GSTClassification of goods - J.J.'s POPCORN (put up in unit container and bearing a registered brand name) - N/N. 1/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT - The product namely J.J. s POP CORN , manufactured from raw corn/maize grains, which, by heating turn into puffed corns/popcorns and then to make it palatable other ingredients like salt and turmeric powder along with oil are added to it fits the description as Prepared foods obtained by the roasting of cereal . This description attracts classification under Chapter Sub-Heading 1904 10 of the First Schedule to the Customs Tariff Act, 1975. Since it is not Corn flakes (tariff item 1904 10 10), Paws, Mudi and the like (tariff item 1904 10 20) or Bulgur wheat (tariff item 1904 10 30), it will fall under the residual tariff item 1904 10 90 of the First Schedule to the Customs Tariff Act, 1975. By virtue of this, the said product falls under entry at Sr. No. 15 of Schedule III of Notification No.1/2017 CENTRAL TAX (Rate) Dated 28-6-2017 and attracts 9% CGST and 9% SGST or 18% IGST.
Issues Involved:
1. Classification of the product 'Popcorn' for GST purposes. 2. Determination of the appropriate GST rate applicable to the product. Detailed Analysis: Issue 1: Classification of the Product 'Popcorn' The applicant, a proprietorship concern, manufactures popcorn sold under a registered brand name. They argued that their product should be classified under Sr. No. 50 of Schedule I of Notification No.1/2017 CENTRAL TAX (Rate) Dated 28-6-2017, which pertains to "Maize (corn) put up in unit container and bearing a registered brand name," attracting 2.5% CGST and 2.5% SGST. The applicant contended that popcorn is essentially maize (corn) and should be classified as such, relying on judgments from the Apex Court and the High Court of Gujarat, which held that simple processing does not change the basic characteristics of cereal grains. Discussion & Findings: The Authority for Advance Ruling (AAR) considered the submissions and observed that the product 'Popcorn' is manufactured by heating raw corn/maize grains, adding salt, turmeric powder, and a negligible quantity of oil. The AAR noted that the product fits the description of "Prepared foods obtained by the roasting of cereal," which is classified under Chapter Sub-Heading 1904 10 of the First Schedule to the Customs Tariff Act, 1975. This classification includes prepared foods obtained by roasting cereals but excludes specific items like corn flakes, paws, mudi, and bulgur wheat. The AAR further observed that there is no specific entry for 'Popcorn' in Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. However, an entry most akin to the product and process is found under Sr. No. 15 of Schedule III, which pertains to "All goods i.e. Corn flakes, bulgar wheat, prepared foods obtained from cereal flakes [other than Puffed rice, commonly known as Muri, flattened or beaten rice, commonly known as Chira, parched rice, commonly known as khoi, parched paddy or rice coated with sugar or gur, commonly known as Murki]." Issue 2: Determination of the Appropriate GST Rate The applicant's contention that their product falls under Sr. No. 50 of Schedule I was not accepted by the AAR on the following grounds: (a) Chapter Heading 1005 pertains to maize (corn) in grain form, and the applicant's product does not retain the grain form after processing. (b) The product is similar to parched rice and puffed rice, which are classified under Chapter Heading 1904. (c) The cited judgments are based on different laws and do not apply to the GST classification system, which follows the Harmonized System of Nomenclature (HSN). (d) The product undergoes processing/preparation, making it a prepared food rather than a grain. The applicant's alternative contention that their product may fall under Sr. No. 57 of Schedule I, which pertains to "Cereal grains otherwise worked," was also rejected. The AAR noted that Chapter 11 does not cover prepared foods obtained from cereal flakes, which are classified under Chapter Heading 1904. Ruling: The AAR ruled that the product 'Popcorn' fits the description of "Prepared foods obtained by the roasting of cereal" under Chapter Sub-Heading 1904 10 of the First Schedule to the Customs Tariff Act, 1975. Since it does not fall under specific items like corn flakes, paws, mudi, or bulgur wheat, it is classified under the residual tariff item 1904 10 90. Consequently, the product falls under entry at Sr. No. 15 of Schedule III of Notification No.1/2017 CENTRAL TAX (Rate) Dated 28-6-2017, attracting 9% CGST and 9% SGST or 18% IGST.
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