2024 (6) TMI 223 - AAR - GST

Classification of goods - Mix Mukhwas - Roasted Til Ajwain - covered by HSN code 12074090 or not - covered by entry no. 70 of Schedule I of Notification No. 1/2017-Central Tax (Rate) and taxed at the rate of 2.5% CGST and 2.5%% SGST or 5% IGST or not - HELD THAT - Both the products, mainly comprises of sesamum seeds 60% in respect of the first product and 97% in respect of the second product; that the process undertaken on the said seeds of cleaning, mixed with salt and citric acid solution for slating purpose, roasting adding turmeric powder does not take away the product from the ambit of chapter 12 in terms of either the chapter note or the HSN notes. Further, reliance also placed on Rule 3 (b) of the GRI supra which clearly states that owing to the mixture when the goods are classifiable under two or more heading, the product shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. Thus, the product is classifiable under chapter 12 of the Customs Tariff Heading, specifically CTH 12074090. The applicant has heavily relied upon circular no. 197/31/96-CX dated 15.4.1996 and three case laws. The reliance of the applicant to the said circular and the case law is not tenable owing to the fact that the circular is in respect of coriander seeds and the circular concludes that the same is covered under chapter 9, specifically 09.09 of HSN. Rate of GST - HELD THAT - It is found that both the products classified under tariff item 12074090 and would be leviable to GST @ 2.5% CGST and 2.5% SGST in terms of entry no. 70 of schedule to notification No. 1/2017-CT (Rate).

Summary

Issues Involved:
1. Classification of products 'Mix Mukhwas' and 'Roasted Til & Ajwain' under HSN code 12074090.
2. Applicability of GST rate for the products under entry no. 70 of Schedule I of Notification No. 1/2017-Central Tax (Rate).

Summary:

Issue 1: Classification under HSN Code 12074090

The applicant, M/s. Bhagat Dhanadal Corporation, manufactures 'Mix Mukhwas' and 'Roasted Til & Ajwain,' both predominantly containing sesamum seeds. The applicant contends that these products should be classified under HSN code 12074090, based on the dominant presence of sesamum seeds and the principle of specific over general heading. The process involves cleaning, salting, roasting, and adding turmeric powder, which does not alter the essential character of the seeds.

The Authority for Advance Ruling (AAR) examined the composition and processes involved in making these products. It was noted that 'Mix Mukhwas' contains 60% sesamum seeds and 27% coriander seeds, while 'Roasted Til & Ajwain' contains 97% sesamum seeds. The AAR referred to the General Rules for Interpretation (GRI) of the Customs Tariff Act, 1975, which states that mixtures should be classified based on the material that gives them their essential character. Given the dominant presence of sesamum seeds, the AAR concluded that both products fall under HSN code 12074090.

Issue 2: Applicability of GST Rate

The applicant sought clarification on whether the products are covered by entry no. 70 of Schedule I of Notification No. 1/2017-Central Tax (Rate), which would subject them to a GST rate of 2.5% CGST and 2.5% SGST or 5% IGST. The AAR confirmed that since the products are classified under tariff item 12074090, they are indeed covered by entry no. 70 of Schedule I of the said notification, making them liable to the specified GST rates.

Ruling:

1. The products 'Mix Mukhwas' and 'Roasted Til & Ajwain' are classified under Tariff Item 12074090 of the Customs Tariff Act, 1975.
2. The products are covered by entry no. 70 of Schedule I of Notification No. 1/2017-Central Tax (Rate) and are taxed at the rate of 2.5% CGST and 2.5% SGST or 5% IGST.