2019 (10) TMI 1205 - AAR - GST

Classification of goods - Tamarind Fruit obtained from the farmers - whether classified under HSN 0810, as fresh fruit , since the product does not undergo any process of manufacture or undergo any value addition? - HELD THAT - The applicant is engaged in procuring tamarind fruit from the farmers across Tamilnadu and supply them to the processing units. As stated by the applicant, tamarind is not dried by them or the by the farmers and is supplied as such without sun drying - the Tamarind, fresh is classified under CTH 0810 90 20 and Tamarind, dried is classified under CTH 0813 40 10. Thus, Tamarind fresh and Tamarind dried are two different products classified under two different tariff headings. The task at hand is to determine what is to be classified as 'Fresh' and what is to be classified as 'Dried'. In the case at hand, the applicant has explained the nature of their product as -the farmers collect ripened tamarind fruits by shaking and smacking the branches using long clubs/ poles.; As the fruits fall to the ground the outer shell gets cracked and come in contact with soil deposits from the ground.; they are buying these fruits from the farmers and supply to the processing units as such, where these fruits will be subjected to processes such as removal of remnants shells, outer fibrous ribs, removal of other impurities like sand/soil, removal of seeds and finally drying them and generate wads of tamarind The applicant has further stated that the tamarind fruits obtained from farmers are not sun dried. The applicant raises Bill of Supply/invoice on purchase of Tamarind Fresh' from the farmers who are unregistered under GST. There are specific headings Tamarind fresh-08109020' and Tamarind dried-08134010' in the Tariff and as per the Explanatory notes (HSN), dried fruits classifiable under 0813 are those falling under CTH 0806 to 0810, prepared by either direct drying in the sun or by industrial processing. As per General Rule of Interpretation Rule 1, Classification shall be determined according to the terms of the headings and if it cannot be done then the classification is to be arrived at following the further rules. Tamarind fresh and Tamarind Dried are specific tariff headings and what constitutes Dried fruit' is clarified in the Explanatory notes(HSN) - When a specific Tariff heading is available, there is no necessity to follow further interpretative rules. In the case at hand, the applicant has stated that the Tamarind fruit' purchased by the farmers do not undergo any process of drying either by sun or industrial process and is hence, classifiable under CTH 08109020 as Tamarind, fresh'.

Summary

Issues Involved:
1. Classification of Tamarind Fruit under HSN 0810 or HSN 0813.
2. Determination of applicable GST rate for Tamarind Fruit.

Issue-wise Detailed Analysis:

1. Classification of Tamarind Fruit under HSN 0810 or HSN 0813:

The applicant, a registered taxable person under GST, is engaged in procuring Tamarind fruit from farmers and supplying it to processing units. The applicant sought an advance ruling on whether the Tamarind Fruit obtained from farmers should be classified under HSN 0810 as "fresh fruit" since it does not undergo any manufacturing process or value addition.

The applicant argued that the Tamarind fruit they procure is harvested by farmers, filled in gunny sacks, and supplied without any further processing. The processing units then remove shells, seeds, and impurities, and dry the Tamarind for consumption. The applicant contended that HSN 0813 describes Dried Tamarind as one which is industrially dried for sale, whereas HSN 0810 pertains to fruits harvested by farmers.

The jurisdictional officer opined that the essential characters of Tamarind fruits and Dried Tamarind cannot be separately determined. Therefore, under General Rule of Interpretation Rule 3(c), the Tamarind fruits and Tamarind dried should be classified under HSN 0813.

The Authority for Advance Ruling (AAR) examined the relevant entries in the Customs Tariff and Explanatory Notes. It was noted that "Tamarind, fresh" is classified under CTH 0810 90 20 and "Tamarind, dried" under CTH 0813 40 10. The Explanatory Notes clarified that fresh fruits under headings 0807 to 0810, when prepared by direct drying in the sun or by industrial processes, are classified as dried fruits under 0813. The AAR found that the Tamarind fruit procured by the applicant from farmers does not undergo any drying process and is thus classifiable under CTH 0810 90 20 as "Tamarind, fresh."

2. Determination of Applicable GST Rate for Tamarind Fruit:

The AAR referred to various notifications to determine the applicable GST rate. Notification 1/2017 dated 28.6.2017 under Schedule II, SI. No. 17 HSN Code 0813, specifies a 5% Central Tax on "Tamarind fruit, Dried." Notification 2/2017 dated 28.6.2017 under HSN 0810 exempts fresh fruits, including Tamarind, from Central Tax.

The applicant contended that their product should be classified under HSN 0810 and be exempt from GST. The AAR concluded that since the Tamarind fruit procured by the applicant does not undergo any drying process, it should be classified under CTH 0810 90 20 as "Tamarind, fresh," which is exempt from GST.

Ruling:

The AAR ruled that the Tamarind supplied by the applicant, which has not undergone the process of direct drying in the sun or by industrial process, is classifiable under CTH 0810 90 20 as "Tamarind, fresh."