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2021 (1) TMI 593 - AAR - GSTLevy of GST - PAPAD of different shapes and sizes in un-cooked condition - 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 "Papad" of different shapes and sizes. 2. Applicable rate of SGST and CGST on such "Papad". Detailed Analysis: Issue 1: Classification of "Papad" of Different Shapes and Sizes The applicant, engaged in manufacturing and marketing "Papad" of various shapes and sizes, sought to classify their product under Tariff Heading 1905. They argued that irrespective of shape or size, their product should be considered "Papad" and thus exempt from tax under Notification No. 02/2017-Central Tax (Rate). The applicant cited several judicial precedents to support their claim, including: - State of Punjab Vs. Amritsar Beverages Ltd.: Supreme Court acknowledged the need for creative interpretation to balance old laws with technological advancements. - M/s. J. K. Cotton Spinning and Weaving Mills Ltd. Vs. Union of India: Supreme Court emphasized the importance of interpreting legislative intent to include new facts and situations. - State of Karnataka Vs. Vasavamba Stores: Karnataka High Court ruled that "Fryums" in uncooked form qualify as "Papad". The applicant also referenced the Tamil Nadu Advance Ruling Authority's decision in the case of Subramani Sumathi, which classified "Maida Vadam/Papad" under Tariff Heading 1905 90 40. Authority's Findings: The Authority examined whether "un-fried Fryums" could be classified as "Papad" under common parlance and judicial interpretations. They noted: - Common Parlance Test: Products should be classified based on how they are understood in common language and commercial parlance. "Papad" is distinct from "Fryums" in the market. - Judicial Precedents: The case of T.T.K. Pharma Ltd. v. Collector of Central Excise classified "Fryums" as "Namkeen" and not "Papad". Similarly, the Supreme Court in Commercial Tax, Indore v. T.T.K. Health Care Ltd. likened "Fryums" to "seviyan", requiring further cooking before consumption. - Visual Distinction: Photographs of "Papad" and "Fryums" highlighted their distinct appearances, reinforcing their separate identities in the market. The Authority concluded that "un-fried Fryums" are not classifiable as "Papad" under Tariff Item 1905 90 40. Issue 2: Applicable Rate of SGST and CGST on Such "Papad" Given the classification of "un-fried Fryums" under Tariff Item 2106 90 99, the applicable rate of GST was determined. Chapter Heading 2106 covers "Food preparations not elsewhere specified or included". Authority's Findings: - Chapter Note 5 and 6 of Chapter 21: These notes provide an inclusive definition covering preparations for human consumption, either directly or after processing. - Relevant Rulings: The Gujarat Advance Authority in M/s. Sonal Product and the Madhya Pradesh Advance Authority in M/s. Alisha Foods classified "un-fried Fryums" under Tariff Item 2106 90 99, attracting an 18% GST rate. Based on these findings, the Authority ruled that "un-fried Fryums" are classifiable under Tariff Item 2106 90 99 and attract a GST rate of 18% (CGST 9% + GGST 9% or IGST 18%). Ruling: 1. Classification: The product of different shapes and sizes manufactured and supplied by the applicant is "un-fried Fryums" and not "Papad", classifiable under Tariff Item 2106 90 99. 2. Applicable Rate: Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product "un-fried Fryums".
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