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2021 (7) TMI 700 - AAR - GSTClassification of goods - rate of tax - Puripapad - Unfried papad - HSN code - whether the said Goods of the applicant can be termed as Papad? - HELD THAT - The product Papad is an eatable item originated and mainly consumed in India. We find that for determination of the correct classification of any product ingredients used in the manufacture of the said product are a decisive factor. In the case of MANILAL COMMODITIES PVT. LTD. VERSUS COLLECTOR OF CUSTOMS 1991 (2) TMI 276 - CEGAT BOMBAY the H ble Tribunal was of the view that the classification on the basis of predominant contents is generally accepted as proper test. The entry No. 96 of Not. No. 02/2017- CT (rate) dated 28-6-17 has description of goods which reads as under Papad by whatever name it is known except when served for consumption. Therefore it can be deduced that all types of Papad as per trade/common parlance name are covered under the said entry. In the matters of classification of goods under taxation statutes all the judicial forums including the Apex Court have stressed upon the importance of the identity of the goods in common parlance and there is a plethora of case laws which hold that for classification of goods under statutes for taxation of commercial supplies thereof the primary test is their identity in the market or in other words their common parlance in the market. The goods are of different shapes and sizes but similar in respect of the ingredients manufacturing process and use. Due to advancement of technology papad does not limit to the same age old traditional round shaped papad but can be in any desired shape and size. In the old era usually papad was manufactured manually therefore it was easy for them to manufacture the Round Shape papad. In the modern era by the advent of technology the product is being manufactured by machines and dies of different shape and size is used in the machine. Therefore with the help of dies of various size and shapes it is convenient to manufacture different shapes and sizes of papad. Further at entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28-6-17 the description goods is Papad by whatever name it is known except when served for consumption . The subject Goods are classified at HSN 19059040.
Issues Involved:
1. Classification of the goods intended to be produced, such as Puripapad and Unfried Papad. Issue-wise Detailed Analysis: 1. Classification of Puripapad and Unfried Papad: Manufacturing Process and Ingredients: The applicant, M/s. Global Gruh Udyog, detailed the manufacturing processes and ingredients for both Puripapad and Unfried Papad. For Unfried Papad, the ingredients include wheat flour, rice flour, salt, various spices, hing, lentil beans powder, papadkhar, and oil. The process involves mixing, cooking, sheeting, cutting, drying, and packing. Puripapad uses wheat flour, aata, rava, salt, sago starch, papadkhar, and oil, following a similar process but with slight variations in drying time and machinery used. Applicant’s Contention: The applicant contends that their products, being unfried and not ready for consumption, should be classified under HSN 1905, specifically under the sub-heading for Papad. They argue that the products meet the criteria set out in Chapter 19 of the HSN classification under GST, which includes preparations of cereals, flour, starch, or milk; pastry cooks’ products. Legal Framework and Precedents: The judgment references several legal precedents and the importance of common parlance in classification. The Hon’ble Supreme Court in the case of CCE, New Delhi v. Connaught Plaza Restaurant (P) Ltd. emphasized the common parlance test, stating that it is essential to classify products based on their identity in the market and common understanding. Similarly, the case of CCE, Nagpur v. Shree Baidyanath Ayurved Bhawan Ltd. reinforced the significance of consumer perception in product classification. Characteristics of Papad: The judgment outlines the main characteristics of Papad, noting that it is typically made from flours of pulses, rice, sago, and other cereals, with added spices and oil. It is a thin, wafer-like product that becomes crispy upon roasting or frying and is traditionally an accompaniment to Indian meals. Technological Advancements: The judgment acknowledges that technological advancements have allowed for the production of Papad in various shapes and sizes, not limited to the traditional round shape. This flexibility in shape and size does not alter the classification of the product as Papad. Relevant Case Laws: Several case laws were cited to support the classification of the applicant’s products as Papad, regardless of shape or size. These include: - Shiv Shakti Gold Finger v. Assistant Commissioner, Commercial Tax, Jaipur, where it was held that Papad remains Papad irrespective of shape and ingredients. - State of Karnataka v. Vasavamba Stores, where Fryums in uncooked/unfried form were classified as Papad. - M/s. Avadh Food Products v. State of Gujarat and M/s. Swethin Food Products v. State of Gujarat, where Fryums were classified as Papad under the GVAT Act. Conclusion and Ruling: The judgment concludes that the applicant’s products, due to their ingredients, manufacturing process, and use, fall under the classification of Papad. The ruling states that the subject goods are classified under HSN 19059040, which includes Papad by whatever name it is known, except when served for consumption. RULING: The subject goods are classified at HSN 19059040.
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