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2022 (3) TMI 1045 - AAAR - GSTClassification of goods - rate of tax - namkeens or not - Jack Fruit Chips and Banana Chips (salted and masala varieties) made out of raw as wen as ripe banana and sold without brand name - Roasted and salted / salted / roasted preparations such as of Ground-nuts, Cashew nut and other seeds - Roasted and salted / salted / roasted preparations such as of Ground-nuts, Cashew nut and other seeds - salted and masala chips of Potato and Tapioca - Sharkaraivaratty sold without brand name classifiable as sweet meats or not - covered by HSN Code 2106.90.99 and taxable under Entry 101 A of Schedule of Central Tax (Rate) Notification 1 of 2017 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 freezing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted 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) - 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. Banana chips - tapioca chips - potato chips - jackfruit chips - sharkara varatty - 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 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. In view of clear provisions in GST laws for interpretation of tariff, the contention of the appellant regarding common parlance understanding of a goods does not hold water, as is therefore rejected. The impugned goods viz. Jackfruit Chips, Banana Chips, Tapoica Chips, Potato Chips, Chembu Chips and Pavakka Chips (Bittergourd) (Whether salted/ masala or otherwise) are held classifiable under Tariff Heading 2008 19 40 of the Customs Tariff Act, 1975. Regarding classification of roasted/salted/roasted and salted Cashew nuts, Ground nuts, and other nuts, there are specific headings under Chapter 20 that covers the products. Accordingly, roasted /salted / roasted and salted Cashew nuts are held classifiable under Tariff Heading 2008 19 10, and other roasted/ salted / roasted and salted nuts and seeds are classifiable under 2008 19 20 of the Customs Tariff Act, 1975 - it is evident that all the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12%.
Issues Involved:
1. Classification and tax rate of Jackfruit Chips, Banana Chips (salted and masala), Sharkaraivaratty, and other similar products. 2. Classification and tax rate of roasted/salted preparations of ground nuts, cashew nuts, and other seeds. 3. Applicability of HSN Code 2106.90.99 and Entry 101A of Schedule I of Notification No. 1/2017-CT(rate). 4. Interpretation of Chapter 20 and Chapter 21 of the Customs Tariff Act. Issue-wise Detailed Analysis: 1. Classification and Tax Rate of Jackfruit Chips, Banana Chips (salted and masala), Sharkaraivaratty, and Other Similar Products: The appellant argued that these products should be classified as "Namkeens" under HSN Code 2106.90.99 and taxed at 5% GST as per Entry 101A of Schedule I to Notification No. 1/2017-CT(rate). However, the Authority for Advance Ruling (AAR) held these products under heading 2008.19 of the Customs Tariff and taxable at 12% GST as per Entry 40 of Schedule II to Notification No. 1/2017-CT(rate). The Appellate Authority upheld this classification, stating that these items remain as fruits and vegetables even after processing and frying, and thus fall under heading 2008, not 2106. 2. Classification and Tax Rate of Roasted/Salted Preparations of Ground Nuts, Cashew Nuts, and Other Seeds: The appellant sought classification of these items as "Namkeens" under HSN Code 2106.90.99. The AAR classified roasted/salted cashew nuts under heading 2008.19.10 and other nuts under 2008.19.20, both attracting 12% GST. The Appellate Authority upheld this decision, emphasizing that these items are specifically covered under Chapter 20, and heading 2106.90 being a residuary heading, cannot override a specific heading. 3. Applicability of HSN Code 2106.90.99 and Entry 101A of Schedule I of Notification No. 1/2017-CT(rate): The appellant contended that Supplementary Note No. 6 of Chapter 21, which includes "Namkeens" and "Sweetmeats" under HSN 2106.90.99, should apply. However, the Appellate Authority noted that Chapter 21 is a residuary entry for miscellaneous edible preparations not specified elsewhere. Since Chapter 20 specifically covers preparations of vegetables, fruits, nuts, etc., the products in question fall under Chapter 20, not 21. 4. Interpretation of Chapter 20 and Chapter 21 of the Customs Tariff Act: The Appellate Authority clarified that Chapter 20 covers preparations of vegetables, fruits, nuts, and other parts of plants, while Chapter 21 is a residuary category for food preparations not specified elsewhere. The essential character of the products (fruits, nuts, vegetables) remains unchanged after processing, thus they are appropriately classified under Chapter 20. The rules of interpretation of the Customs Tariff Act, including the specific versus general rule, support this classification. Conclusion: The Appellate Authority upheld the AAR’s classification of the products under Chapter 20, specifically heading 2008, attracting 12% GST, and rejected the appellant’s contention for classification under HSN 2106.90.99 with 5% GST. The appeal was rejected, and the AAR’s decision was affirmed with modifications. Order: 1. Jackfruit Chips and Banana Chips (salted and masala) are classifiable under heading 2008.19.40, taxable at 12% GST. 2. Sharkaraivaratty is classifiable under heading 2008.19.40, taxable at 12% GST. 3. Roasted/salted cashew nuts are classifiable under heading 2008.19.10, and other roasted/salted nuts under 2008.19.20, both taxable at 12% GST. 4. Salted and masala chips of Potato and Tapioca are classifiable under heading 2008.19.40, taxable at 12% GST. The appeal was dismissed, and the AAR’s decision was upheld.
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