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2022 (3) TMI 1363 - AAR - GSTClassification of services - rate of GST - Ready to Eat popcorn sold in retail packages - HELD THAT - As seen from the facts of the case the tariff heading 2008 pertains to a class of commodities covering fruits, nuts and other parts of plants and not the preparations pertains to cereals etc., which are enumerated in the competing tariff entry 1904 . Therefore the commodity under question clearly does not fall under tariff head 2008 - Regarding the contention of the applicant with respect to classification of RTE popcorn under a general tariff heading 2016 it is to inform that, the Hon ble Supreme Court of India in a catena of case laws held that a general entry or a residual entry will be preferred for a classification of commodity only in the absence of a specific entry. Hon ble Supreme Court of India in the case of DUNLOP INDIA LTD. MADRAS RUBBER FACTORY LTD. VERSUS UNION OF INDIA AND OTHERS 1975 (10) TMI 94 - SUPREME COURT held that when an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. Thus when a specific entry is available for enumerating the commodity RTE popcorn to relegate it to the orphanage of the residuary entry will be against the principle of classification as held by Hon ble Apex Court in the above precedents. Hence RTE popcorn is classifiable under tariff head 1904 enumerated at Serial No. 15 of Schedule III of Notification No. 01/2017 dated 28.06.2017 - thus, HSN classification is 1904 and the rate of tax is 9% SGST CGST each.
Issues:
1. Classification of 'Ready to Eat' popcorn under HSN codes. 2. Determination of the applicable GST rate on retail sales of 'Ready to Eat' popcorn. Analysis: Issue 1: Classification of 'Ready to Eat' popcorn under HSN codes The applicant, a company selling ready-to-eat popcorn, sought clarification on the correct classification of their product under the Harmonized System of Nomenclature (HSN) codes for GST purposes. The applicant believed that the popcorn should be classified under Tariff Heading 1904, which covers prepared foods obtained by swelling or roasting of cereals or cereal products. They argued that the process of swelling maize corn by heating it qualifies the product for this classification. Additionally, they mentioned that in some cases, RTE popcorn had been classified under Tariff Heading 2008 or 2106. However, the Authority for Advance Ruling analyzed the facts presented and concluded that the RTE popcorn indeed falls under Tariff Heading 1904, as it involves the swelling of corn through a heating process, as specified in the relevant tariff entry. The ruling emphasized that specific entries should be preferred over general or residual entries for classification, as established by various judgments of the Supreme Court of India. Therefore, the Authority ruled that the correct HSN classification for the 'Ready to Eat' popcorn is '1904'. Issue 2: Determination of the applicable GST rate on retail sales of 'Ready to Eat' popcorn In addition to the classification issue, the applicant also sought clarification on the GST rate applicable to retail sales of their 'Ready to Eat' popcorn. The Authority determined that the rate of GST applicable on the 'Ready to Eat' popcorn sold in retail packages is 9% each for State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST). This determination was based on the classification of the product under Tariff Heading 1904, as discussed in the ruling. Therefore, the ruling provided clarity on both the HSN classification and the applicable GST rate for the sale of 'Ready to Eat' popcorn. In conclusion, the Advance Ruling Authority clarified the classification of 'Ready to Eat' popcorn under the HSN codes as '1904' and determined the applicable GST rate for retail sales of the product as 9% SGST and 9% CGST each. The ruling was based on a detailed analysis of the product's characteristics and relevant tariff entries, ensuring consistency with established legal principles and court precedents.
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