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2021 (1) TMI 589 - AAR - GSTLevy of GST - sale of Fryums manufactured by the applicant - Classification of goods - rate of tax - HELD THAT - The main ingredient of their product i.e. so called Papad of different shapes and sizes i.e. Fryums is wheat flour, superfine wheat flour, whereas main ingredient of Papad is batter of Pulses i.e. Moong dal, Udad Dal, black pepper and not of wheat Flour and Maida. In the market most popular papad are of Moong dal Papad and Udad dal papad . Therefore, main ingredients of both the Product i.e. Fryums and Papad are not same but are different. Further, the manufacturing processes of both the product have also some differences. In Fryums some sort of moisture are maintained at specific temperature and then fried the Fryums and applied Masala then put in a unit container for sale whereas Papad are required to be completely dried in sun light otherwise Papad will become rotten if some moisture remains in Papad and cannot be useful for consumption. Further Papad are commonly sold in ready to cook condition and not fried or baked whereas applicant product sold as ready to eat. Hence the applicant s claim that their product fried Fryums are known as papad is totally baseless and misleading. The applicant has relied upon the judgment of Hon ble Supreme Court in the case of Shivshakti Gold Finger 1996 (5) TMI 419 - SUPREME COURT wherein the Hon ble Supreme Court examined the matter under Rajasthan Sales Tax Act, whether Gol Papad manufactured out of Maida, Salt and Starch are Papad or not. It was held that size or shape is irrelevant and that Papad of all shapes and sizes are covered under the entry Papad. Thus, the fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of fried Fryums - 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 - In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known in the heading 1905 is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals - the product different shapes and sizes fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, 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 Services Tax rate of 18% is applicable to the product fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. It can be concluded that applicant s product of different shape and sizes is fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.
Issues Involved:
1. Classification of "Fryums" as "Papad" under Tariff Item 19059040. 2. Applicability of tax exemption on "Fryums" under the GST regime. 3. Determination of the appropriate GST rate for "Fryums." Issue-wise Detailed Analysis: 1. Classification of "Fryums" as "Papad" under Tariff Item 19059040: The applicant argued that "Fryums," which are prepared from maida, fried, and then sprinkled with masala, should be classified as "Papad" under Tariff Item 19059040, which is exempt from tax. They relied on several judgments from various authorities and courts, including the Gujarat VAT Tribunal, Karnataka High Court, and the Supreme Court, which had previously classified "Fryums" as "Papad" under different tax regimes. However, the concerned officer contended that "Fryums" are not "Papad" but are classifiable under Tariff Heading 21069099. The officer highlighted that the applicant's product is sold as a ready-to-eat item, distinct from the traditional "Papad," which is typically sold in an uncooked form. The officer also pointed out that the main ingredients and manufacturing processes of "Fryums" and "Papad" are different. The Authority for Advance Ruling (AAR) considered the common parlance test, which interprets terms based on their popular meaning. It concluded that "Fryums" are not recognized as "Papad" in the market. The AAR referred to previous rulings, including the CEGAT decision in the case of T.T.K. Pharma Ltd., which classified "Fryums" as "Namkeen" and not "Papad." The AAR also noted that the applicant's reliance on past judgments under different tax regimes was not applicable to the GST context. 2. Applicability of Tax Exemption on "Fryums" under the GST Regime: The applicant argued that "Fryums" should be exempt from tax under Entry No. 96 of Notification No. 02/2017-Central Tax (Rate), which exempts "Papad" by whatever name called, except when served for consumption. They cited the Tamil Nadu Advance Ruling Authority's decision in the case of M/s. Subramani Sumathi, which classified "Unfried Fryums/Pappad" as exempt from tax. The concerned officer countered that the applicant's product does not qualify for exemption as it is not "Papad" but "Fryums," which are ready-to-eat and classifiable under Chapter Heading 21069099. The officer emphasized that the applicant's product is sold in a ready-to-consume condition, unlike "Papad," which requires further cooking. The AAR agreed with the officer's contention, stating that "Fryums" are not "Papad" and do not qualify for the exemption under Entry No. 96. The AAR noted that the product is sold as a ready-to-eat snack and is recognized as "Namkeen" in common parlance. 3. Determination of the Appropriate GST Rate for "Fryums": The applicant sought clarity on the GST rate applicable to "Fryums" if they were not classified as "Papad." The concerned officer argued that "Fryums" should be classified under Tariff Heading 21069099, attracting a GST rate of 18% (9% CGST + 9% SGST). The AAR examined Chapter Heading 2106, which covers food preparations not elsewhere specified or included. It concluded that "Fryums" fall under this heading as they are ready-to-eat food preparations. The AAR referred to Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), which specifies an 18% GST rate for such products. Conclusion: The AAR ruled that "Fryums" manufactured and supplied by the applicant are classifiable under Tariff Item 21069099 and not as "Papad" under Tariff Item 19059040. Consequently, "Fryums" attract a GST rate of 18% (9% CGST + 9% SGST) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate).
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