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2022 (3) TMI 679 - AAAR - GSTClassification of goods - NAMKEENS or not - Jack Fruit Chips sold without BRAND NAME - Roasted and salted / salted / roasted preparations such as of Ground-nuts, Cashew nut and other seeds, sold without a brand name - salted and masala chips of Potato and Tapioca sold without brand name - covered by HSN Code 2106.90.99 and taxable under Entry 101 A of Schedule of CT(Rate) Notification No. 1 of 2017 or not? - classification of jack fruit chips by supplier under HSN Code 1903 is correct or not - HELD THAT - From the plain reading of the contents of chapter 21, it reveals that it includes the food preparations which are not elsewhere specified in the customs tariff. Those food preparations not specified or included elsewhere in the tariff being preparations for use either directly or after processing for human consumption are to be classified under this heading 2106. Further the heading 2106 specifically excludes the preparations made from fruit, nuts or other edible parts of plants of heading 20.08, provided that the essential character of the preparations is given by such fruit, nuts or other edible parts of plants. Therefore, it is evident that the entry 2106.90 is a residuary entry in respect of edible preparations and hence the edible preparations shall be classified under this entry only if the same are not classifiable under any of the other specific entries for edible preparations. It is noticed that as per chapter note 1(a) to chapter 20, the chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in chapter 7, 8 or 11. It means that these items not being processed or preserved by the said processes shall be covered in chapter 20. The processes specified in chapter, 7, 8 or 11 are freeing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted and salted nuts and fruits such as ground nuts, cashew nuts, other seeds and nuts and these are specifically covered under said heading vide sl. No. 40 of schedule II to notification No. 1/2017-CT (rate) - Hence there remains no doubt that the roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts shall be appropriately classifiable under heading 2008 of customs tariff. Even otherwise also, heading 2106.90 being a residuary heading shall not stand against a specific heading 2008 as per Rules of interpretation of the tariff. Classification of banana chips, tapioca chips, potato chips, jackfruit chips and sharkara varatty, the manufacturing process applied by the appellant in making these items is not in dispute - HELD THAT - These chips are made by slicing, frying, adding salt or masala or jaggery syrup before packing and supply. It is not the case of the appellant that the essential characteristics of the fruits or vegetables are getting changed by applying the processes. As far as the essential nature of the products remains unchanged, the edible parts of plants are appropriately classifiable under heading 2008. In this case, the raw banana or potato or jackfruit or tapioca even after going through the process of frying and salting remain as vegetables and fruits only. The process of frying in oil and roasting are cooking methods wherein high temperature is used for processing of the edible parts of the fruit or vegetables as in this case. The process of roasting and frying has not been excluded in Note 1 to Chapter 20 and as such Note 1 is applicable to Roasted and fried vegetables, fruits, nuts and edible parts of plants. Further the explanatory notes to heading 2008 specify that this heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. When according to chapter notes and description of tariff items, the products are classifiable under specific headings of Chapter 20, they cannot be classified under Heading 2106 as food preparations not elsewhere specified or included or under Chapter 8 as claimed by the appellant. By applying the rules for interpretation of the tariff, specially rule 1, 2 and 3 of the same, it is evident that the impugned goods are appropriately classifiable under heading 2008 and not under heading 2106. Rule 2(a) provides that any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance, according to which the chips of jackfruit, potato, banana or tapioca gets also appropriately classifiable under. heading 2008 along with specifically covered goods viz. Roasted and salted nuts under examination (which is covered by Rule 3(a) of the said rules for interpretation). Further, chapter 21 covers Miscellaneous edible preparations, whereas chapter 20 specifically covers Preparations of vegetables, fruits, nuts or other parts of plants - Hence, when there is a specific entry providing for the most specific description in the heading 2008 to the impugned products over the residuary heading description of heading 2106.90, the said impugned goods is held appropriately classifiable under heading 2008, by virtue of rule 3(a) of the rules for interpretation. The Jackfruit Chips are classifiable under Customs Tariff Heading 2008.19.40 and is liable to GST at the rate of 12% as per Entry at Sl No. 40 of Schedule II of Notification No. 01 /2017 Central Tax (Rate) dated 28.06.2017 - the classification of Jackfruit Chips by my supplier under HSN code 1903 is not correct - Roasted / salted / roasted and salted Cashew nuts are classifiable under Customs Tariff Heading 2008.19.10 and roasted / salted / roasted and salted Ground nuts and other nuts are classifiable under Customs Tariff Heading 2008.19.20 and is liable to GST at the rate of 12% as per Entry at Sl. No. 40 of Schedule II of Notification No.01 /2017 Central Tax (Rate) dated 28.06.2017 - The salted and masala chips of Potato and Tapioca are classifiable under Customs Tariff Heading 2008.19.40 and is liable to GST at the rate of 12% as per Entry at Sl. No. 40 of schedule II of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017.
Issues Involved:
1. Classification and tax rate of Jackfruit Chips, Banana Chips, Tapioca Chips, Potato Chips, Chembu Chips, Pavakka Chips, and roasted/salted/roasted and salted preparations of Ground nuts, Cashew nuts, and other seeds. 2. Correctness of the classification of Jackfruit Chips under HSN Code 1903 by the supplier. 3. Applicability of HSN Code 2106.90.99 for various chips and roasted/salted preparations and their classification as Namkeens. Detailed Analysis: 1. Classification and Tax Rate of Chips and Roasted/Salted Preparations: The appellant argued that the products should be classified under HSN 2106.90.99 as Namkeens or sweetmeats and taxed at 5% under Entry 101A of Schedule I to Notification No. 1/2017-CT(rate). They relied on Supplementary Notes No. 5(b) and 6 of Chapter 21, which include preparations for human consumption and products commonly known as Namkeens and sweetmeats. However, the authority examined the rival entries, particularly Chapter 20 and Heading 2008, which cover preparations of vegetables, fruits, nuts, or other parts of plants. The explanatory notes to Heading 2008 specify that it includes products like roasted, salted, or roasted and salted nuts and fruits. The authority concluded that these products are appropriately classifiable under Heading 2008, as the essential characteristics of the fruits or vegetables remain unchanged after processing (slicing, frying, adding salt or masala). The authority noted that Heading 2106.90 is a residuary entry and should only be used if the products are not covered elsewhere in the tariff. Since the products in question are specifically covered under Heading 2008, they cannot be classified under Heading 2106.90. 2. Correctness of Classification of Jackfruit Chips under HSN Code 1903: The appellant's supplier classified Jackfruit Chips under HSN Code 1903. The authority rejected this classification, affirming that Jackfruit Chips should be classified under Customs Tariff Heading 2008.19.40. 3. Applicability of HSN Code 2106.90.99 for Various Chips and Roasted/Salted Preparations: The appellant contended that products like Jackfruit Chips, Banana Chips, and roasted/salted preparations should be classified under HSN 2106.90.99 as Namkeens. The authority rejected this contention, stating that these products are specifically covered under Heading 2008. The rules for interpretation of the tariff, particularly Rule 1, 2, and 3, were applied to determine that the products should be classified under Heading 2008. The authority also referred to relevant case laws and previous advance rulings, which supported the classification under Heading 2008. The decision in Pepsico India Holdings P Ltd Vs Commissioner of Central Excise and ST Chandigarh reinforced the classification of similar products under Chapter 20 rather than Chapter 21. Conclusion: The authority upheld the Advance Ruling No. KER/114/2021 dated 26/05/2021 with modifications. The products in question (Jackfruit Chips, Banana Chips, Tapioca Chips, Potato Chips, Chembu Chips, Pavakka Chips, and roasted/salted/roasted and salted preparations of Ground nuts, Cashew nuts, and other seeds) are classified under various sub-headings of Heading 2008 of the Customs Tariff Act, 1975, and are liable to GST at the rate of 12% as per Entry at Sl. No. 40 of Schedule II of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. The appeal filed by the appellant was consequently rejected.
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