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2020 (12) TMI 1206 - AAR - GSTScope of Advance Ruling application - Classification of goods - Flavored Milk - to be classified under HSN 0402 99 90 or under 2202 99 30 or under any other Chapter? - HELD THAT - It is an undisputed fact that the applicant supplies the impugned product under the brand name Nandini , to the owner of the said brand M/s. KMF, against whom an offence case is pending before DGGI, Bangalore. The applicant themselves admitted that M/s KMF hold 90% shares and hence have management / administrative control over the applicant. M/s KMF are the owners of Nandini brand, against whom an offence case is pending before DGGI, Bengaluru on classification of flavoured milk. Thus it is very clear that the applicant, being the job worker to M/s KMF, becomes part of M/s KMF, as they also supply the same product of flavoured milk and hence is bound to oblige the conclusion of the proceedings in this regard. Hence the pendency of the proceedings automatically applies to the applicant also. Therefore the instant application is liable for rejection, under first proviso to Section 98(2) of the CGST Act 2017. The application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.
Issues Involved:
Classification of flavored milk under HSN 0402 99 90 or 2202 99 30, Admissibility of the application Classification of Flavored Milk: The applicant, a registered society engaged in processing milk products, sought an advance ruling on the classification of flavored milk under tariff headings 0402 99 90 or 2202 99 30. The applicant supplies flavored milk under the brand name "Nandini" to M/s Karnataka Co-operative Milk Producers Federation Ltd. (KMF). The applicant argued that the issue of classification was not pending or decided under any provisions of the CGST/KGST Act. They highlighted that they are a separate legal entity from M/s KMF, do not own the brand "Nandini," and pay royalty to M/s KMF for its use. However, it was revealed that M/s KMF owns 90% shares in the applicant company and has management control over it. As M/s KMF is facing a case on the classification of flavored milk, the applicant, being a job worker for M/s KMF, is bound by the outcome of those proceedings. Consequently, the authority rejected the application as inadmissible under the first proviso to Section 98(2) of the CGST Act 2017. Admissibility of the Application: The authority considered the admissibility of the application in relation to the classification of flavored milk. The applicant argued for the admissibility based on the grounds that the classification issue was not pending in any proceedings concerning them under the CGST/KGST Act. They emphasized their separate legal status from M/s KMF, the brand owner, and their role as a manufacturer supplying flavored milk under the "Nandini" brand. However, the authority found that due to the significant shareholding and management control of M/s KMF over the applicant, the pending case against M/s KMF regarding the classification of flavored milk also affected the applicant. As a result, the authority rejected the application as inadmissible under the first proviso to Section 98(2) of the CGST Act 2017.
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