2021 (10) TMI 54 - AAAR - GST

Classification of goods - Mixed Flour which is used for preparing different traditional Indian dishes - classified under Tariff Item 1106 vide Entry No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and Notification No.01/2017-State Tax (Rate) dated 30.06.2017, Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 or otherwise - HELD THAT - The products of the applicant, including Upma Mix Flour, RavaIdli Mix Flour, Muthiya Mix Flour and Khichu Mix Flour, are not classifiable under Chapter 11 of the CTA, 1975.Therefore, the view of the GAAR to initially classify these products under Chapter Heading 11.01 and 11.02 of the CTA, 1975 and thereafter holding these products as classifiable under Chapter Heading 23.02 of the CTA, 1975 on the ground of non-furnishing of details of Starch Content, Ash Content, Rate of passage through a sieve in respect of these products, does not appear proper - Even otherwise, classifying the products Upma Mix Flour, RavaIdli Mix Flour, Muthiya Mix Flour and Khichu Mix Flour under Chapter Heading 23.02 of the CTA, 1975 does not appear correct. Chapter Heading 23.02 of the CTA, 1975 covers Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants . Thus, it is evident that the Chapter Heading 23.02 covers Bran, sharps and other residues of cereals or of leguminous plants whereas the products Upma Mix Flour, RavaIdli Mix Flour, Muthiya Mix Flour and Khichu Mix Flour cannot be said to be containing bran, sharps and other residues of cereals or of leguminous plants - the products Upma Mix Flour, RavaIdli Mix Flour, Muthiya Mix Flour and Khichu Mix Flour are not classifiable under Chapter Heading 23.02 of the CTA, 1975. Chapter Heading 21.06 and specifically Tariff Item 2106 90 99 is not confined to processed or semi processed food, cooked or semi cooked food, preserved food and ready to eat food. In fact, any product which is a food preparation and which is not elsewhere specified or included in the CTA, 1975, gets covered under Chapter Heading 21.06 of the CTA, 1975. Therefore, merely because the end consumer of the Instant Mix Flour is required to follow certain food preparation processes before such product(s) can be consumed, is no ground to take these products out of Chapter Heading 21.06 of the CTA, 1975 - it is pertinent to note that for the purpose of Goods and Services Tax, classification as per CTA, 1975 has been adopted, which in turn is based on the Harmonised System of Nomenclature, which was not the case with the Schedule-I of the Gujarat Value Added Tax Act, 2003. Therefore, the Determination Orders issued under the Gujarat VAT Act, 2003 are not applicable in the present case. Various Instant Mix Flour / Ready Mix Flour of the applicant are classifiable under Chapter Heading 21.06 and Tariff Item 2106 90 99 of the CTA, 1975 - Food preparations not elsewhere specified or included falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18%, though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or Schedule-II, attracting Goods and Services Tax @ 5% or 12%.

Summary

Issues Involved:
1. Classification of various Mix Flour/Instant Mix Flour products.
2. Applicable Goods and Services Tax (GST) rate on these products.
3. Classification of Chutney Powder.
4. Whether the supply of Gota Mix and Chutney Powder, and Bhajiya Mix and Chutney Powder should be considered as a composite supply.

Comprehensive, Issue-wise Detailed Analysis:

1. Classification of Various Mix Flour/Instant Mix Flour Products:
The applicant, a manufacturer of various types of Mix Flour/Instant Mix Flour, sought an advance ruling on the classification of these products under the Customs Tariff Act, 1975 (CTA, 1975). The products included Khaman Mix Flour, Gota Mix Flour, Dhokla Mix Flour, Handwa Mix Flour, Idli Mix Flour, Dosa Mix Flour, Dahiwada Mix Flour, Dalwada Mix Flour, Khichu Mix Flour, Upma Mix Flour, RavaIdli Mix Flour, Medu Wada Mix Flour, Muthiya Mix Flour, Pudla Mix Flour, Moong Bhajiya Mix Flour, Chorafali Mix Flour, and Bhajiya Mix Flour.

The Gujarat Authority for Advance Ruling (GAAR) initially classified some products under Tariff Item 1106 10 00 of the CTA, 1975, and others under Tariff Item 2302 30 00 / 2302 40 00. However, the Appellate Authority for Advance Ruling (AAAR) held that these products are appropriately classifiable under Chapter Heading 21.06 of the CTA, 1975, as "Food Preparations not elsewhere specified or included." The AAAR noted that the products contain spices and other ingredients in significant proportions, which are not mentioned in Chapter Heading 11.01 or 11.02. Therefore, they are excluded from these headings and are classified under Tariff Item 2106 90 99.

2. Applicable Goods and Services Tax (GST) Rate on These Products:
The AAAR ruled that the various Mix Flour/Instant Mix Flour products fall under Chapter Heading 21.06 and Tariff Item 2106 90 99 of the CTA, 1975. Consequently, these products are covered under entry at Sr. No. 23 of Schedule-III of Notification No. 1/2017-Central Tax (Rate), as amended, attracting GST at the rate of 18% (9% CGST + 9% SGST).

3. Classification of Chutney Powder:
The GAAR had classified Chutney Powder under Tariff Item 2106 90 99 of the CTA, 1975, attracting GST at 18% up to 14.11.2017 and 5% with effect from 15.11.2017. This classification was not challenged by either the CGST Department or the applicant, and thus, it remains unchanged.

4. Composite Supply of Gota Mix and Chutney Powder, and Bhajiya Mix and Chutney Powder:
The GAAR had ruled that the supply of Gota Mix and Chutney Powder, and Bhajiya Mix and Chutney Powder, should be considered as a mixed supply of goods. The AAAR upheld this ruling, stating that these supplies will be considered as a supply of Gota Mix and Bhajiya Mix, respectively, falling under Sub-heading 1106 10 00 of the CTA, 1975, with a GST liability of 5% (2.5% CGST + 2.5% SGST).

Conclusion:
The AAAR modified the GAAR's ruling to classify the various Mix Flour/Instant Mix Flour products under Tariff Item 2106 90 99 of the CTA, 1975, attracting an 18% GST rate. The classification of Chutney Powder remains under Tariff Item 2106 90 99 with an 18% GST rate up to 14.11.2017 and 5% thereafter. The supply of Gota Mix and Chutney Powder, and Bhajiya Mix and Chutney Powder, is considered a mixed supply with a GST liability of 5%.