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2021 (3) TMI 500 - AAAR - GSTClassification of goods - rate of tax - Nizam Pakku - classifiable under Chapter heading 0802 8030 of the Customs Tariff or otherwise? - appellant has claimed that while they agree the classification upto 4 digit level, they do not agree to the classification at 8 digit level but they do not press the same - HELD THAT - It is found from the Commercial Invoice No. E006/2017-2018 dated 08.03.2018 and the related Shipping Bill for Export, the product is described as Nizam Betel Nut (Arecanut) . Thus, it is seen that the product of the appellant is known as Betel nut (Areca nut) and assessed accordingly by the Customs. The terms betel nut and areca nut are the same and used interchangeably, The product of the appellant Nizam Pakku classifiable under CTH 0802 8090 is leviable to 2.5% CGST as per Sl.No.28 of Annexure-I of Notification No. 01/2017C.T. (Rate) dated 28.06.2017 and 2.5% SGST under Sl.No. 28 of Annexure -I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended.
Issues Involved:
1. Classification of "Nizam Pakku" under the Customs Tariff. 2. Applicable rate of GST for "Nizam Pakku." Issue-wise Detailed Analysis: 1. Classification of "Nizam Pakku": The appellant, engaged in trading "Nizam Pakku" (a type of processed areca nut), sought clarification on its classification under the Customs Tariff. They argued that "Nizam Pakku" should be classified under Chapter heading 0802 8030 as "ground areca nut" and not under the residual entry 0802 8090. The appellant cited various legal precedents, including the Supreme Court's ruling in Dunlop India Ltd. vs UOI and Plasmac Machine Mfg. Co. Ltd. vs CCE, emphasizing that specific classification should be preferred over a generic heading. The Original Authority, however, classified "Nizam Pakku" under Chapter 0802 8090, citing a previous decision by the CESTAT in the case of Azam Laminators Pvt. Ltd., which dealt with a similar product. The appellant did not contest the classification under Chapter 0802 but disagreed with the eight-digit classification under 0802 8090, preferring 0802 8030 instead. The Appellate Authority upheld the Original Authority's classification under 0802 8090, noting that the classification of the product had attained finality in the case of M/s. Azam Laminators Pvt. Ltd. and there were no changes in the manufacturing process or the statute on classification. 2. Applicable Rate of GST for "Nizam Pakku": The appellant contended that "Nizam Pakku" should attract a 5% GST rate under S.No. 28 of Schedule I of Notification 1/2017-C.T. (Rate) dated 28.06.2017, which lists "Dried Areca Nuts, whether or not shelled or peeled." They argued that the term "areca nut" and "betel nut" are used interchangeably and cited various judicial precedents and HSN notes supporting this view. They also emphasized that the cumulative tax incidence on the product in the pre-GST regime was around 5% (Central Excise - NIL; VAT - 4-5%), aligning with the GST Council's guidelines for fixing rates. The Original Authority, however, ruled that "Nizam Pakku" should be taxed at 12% GST under S.No. 15 of Schedule II of Notification 1/2017, which covers "Other nuts, dried, whether or not shelled or peeled, such as Almonds, Hazelnuts, etc. [other than dried areca nuts]." They relied on the minutes of the 14th GST Council Meeting, which suggested that processed areca nuts (referred to as betel nuts) should be taxed at 12%. The Appellate Authority, after considering the submissions and relevant statutory provisions, concluded that the product "Nizam Pakku" should be taxed at 5% GST. They noted that the product is known commercially as "Nizam Betel Nut (Arecanut)" and that the terms "betel nut" and "areca nut" are used interchangeably. The Authority emphasized that the description in the notification is clear and unambiguous, covering "Dried Areca Nuts, whether or not shelled or peeled" under the 5% rate. Conclusion: The Appellate Authority modified the ruling of the Original Authority, holding that "Nizam Pakku" classifiable under CTH 0802 8090 is leviable to 2.5% CGST and 2.5% SGST as per S.No. 28 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017.
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