2018 (10) TMI 1312 - AAR - GST

Rate of GST - Classification of the commodity - commodity Ada - whether the commodity Ada should be classified under the HSN Code 1902 along with Seviyan (Vemicelli) attracting GST at the rate of 5% or should be classified under residual entry at Sl No. 453 of the Third Schedule of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 attracting 18% GST? Held that - The applicable rule in this case is Rule 4 and as per the same, Ada is to be classified under the heading appropriate to the goods to which it is most similar in character. The product, Ada , in sum and substance, is something akin, i.e., similar in character to Vermicelli . Both are made from maida or rice flour or maida and rice flour and are manufactured through an identical process and ada is used for giving richness to certain regional varieties of payasams called Ada Pradhaman and Palada Pradhaman , which are popular in Kerala and certain parts of Tamil Nadu. There is indeed nothing to differentiate ada from vermicelli except for the dies that are used in the manufacturing process which gives it a different shape. Applying Rule 4 of the General Rules of Interpretation of the First Schedule to the Customs Tariff Act, 1975 and the principles of classification of goods as settled by the various judgments of the Hon ble Apex Court, Ada merits classification under HSN 1902 of the 1st Schedule Sl No. 97 - Seviyan (Vermicelli) of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 attracting 5% GST. Ruling - Ada is rightly classifiable under HSN 1902 of the 1st Schedule Sl No. 97-Seviyan (Vermicelli) of Notification No. 01/2017-CentraI Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 dated 30.06.2017 attracting 5% GST.

Summary

Issues: Classification of the commodity "Ada" under the GST Tariff - Whether to classify under HSN Code 1902 as "Seviyan (Vermicelli)" at 5% GST or under the residual entry at 18% GST.

Analysis:
1. The applicant, a wholesale distributor of Ada, sought an Advance Ruling on the tax rate of Ada, arguing its similarity to Seviyan (vermicelli) used in making sweet dishes.
2. The applicant presented a judgment equating ada and vermicelli, emphasizing ada's use in sweet dishes popular in Kerala.
3. The CGST Member classified Ada under HSN 1902 at 5% GST, while the SGST Member opted for the residual entry at 18% GST due to lack of specific mention.
4. Due to the disagreement, the matter was referred to the Appellate Authority for Advance Ruling for further clarification.
5. After a hearing, it was established that Ada and Seviyan (vermicelli) are similar products made from maida or rice flour, used for enriching regional sweet dishes.
6. The classification issue was analyzed based on the General Rules of Interpretation of the Customs Tariff Act, 1975, and relevant Supreme Court judgments on classification principles.
7. The Supreme Court precedents highlighted that goods should be classified under specific entries if applicable, with the residuary entry as a last resort.
8. Applying Rule 4 of the General Rules of Interpretation, Ada was deemed akin to Vermicelli and classified under HSN 1902 at 5% GST.
9. The final ruling classified Ada under HSN 1902 as Seviyan (Vermicelli) at 5% GST, aligning with the CGST Member's initial classification.

This detailed analysis of the judgment clarifies the classification of Ada under the GST Tariff, emphasizing the application of legal principles and precedents to determine the appropriate tax rate for the commodity.