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2020 (5) TMI 214 - AAR - GSTClassification of goods - UHT Sterilized Flavoured Milk - whether classifiable under Chapter 4-tariff Heading 0402 which covers Milk containing added sugar or other sweetening matter or under Tariff Heading 0404 which covers Other , i.e. products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included? - HELD THAT - The applicants manufacture/procure and supply UHT Sterilised Flavoured Milk and market it under the brand name Britannia Winkin Cow Thick Shake . The product is made in multiple flavours -strawberry(strawbericious), Mango(mangolicious), Vanilla(vanillicious) and chocolate(chocolicious)(hereinafter referred to as the Products ) - The manufacturing process involves heating (UHT sterilization) and cooling of milk, to which the constituents are added at different points of the heating/cooling process, filtered and de-aerated/homogenised and thereafter packaged. From the constituents of the product in hand furnished by the applicant, it is seen that the product consists of Standardised/Toned milk (87to 89%) without removal of Fat content thereon, which is sweetened with around 101)/0 of sugar to which stabilizers, flavours, etc are added and is supplied in tetrapacks after necessary processes. The products are marketed as Thick shakes and is ready for consumption as stated by the applicant - Comparing the product and those covered under CTH 0402/0404, it is evident that the product in hand consisting of milk flavoured with vanilla/ strawberry/mango/cocoa powder being ready for consumption beverages based on Milk is specifically excluded under CTH 0402, as seen from the Explanatory notes to HSN of the said chapter and hence not classifiable under CTH 0402; Also the product being not Whey , the plausible CTH will be 0404 90 only and there again the Explanatory notes clearly states that this heading includes products which lack one or more natural milk constituents, to which natural milk constituents are added, whereas in the case at hand, the product do not lack any natural milk constituents nor any natural milk constituents is added to the product - thus, the product is not classifiable under either CTH 0402 or 0404. Other non-alcoholic beverages, not including fruit or vegetable juice of heading 20.09 are covered under 2202.99 - Other and as per the explanation at (B) (2), the group covers beverages ready for consumption such as those with a basis of milk. The word beverage , though not defined under CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product flavoured milk can be consumed as it is and hence is a beverage with a basis of milk - Therefore, the product is appropriately classifiable under CTH 22029930. The applicant has relied on the General Rules of Interpretation of Tariff and has contended that the product is classifiable under Chapter 4 of the Customs Tariff made applicable to GST applying Rule 3 of the Interpretation Rules - As per the above Rule, classification is to be determined based on the terms of the heading and any related Section/Chapter Note. CTH 22029930 specifically covers Beverages containing milk and the explanation notes clarifies that those beverages with a basis of milk are covered under this CTH. Rule 2 and other rules of Interpretation are to be applied only when the goods are classifiable under more than one heading and cannot be classified on application of Rule 1 of GIR - In the case at hand there is a specific heading for the product and therefore, there is no necessity to traverse further and apply the other rules and reject the claim of the applicant. The applicant has relied on the FSSAI regulations and has claimed that the product is a milk and to be classified under CTH 04 - the classification as available in the Customs Tariff is aligned with the International convention based on Harmonised system of Nomenclature. The product is specifically covered under a specified heading. Thus, UHT Sterilized Flavoured Milk marketed under the brand name Britannia Winkin Cow Thick Shake by the applicant is not classifiable under the Tariff heading 0402 /0404 but classifiable under CTH 22029930.
Issues Involved:
1. Classification of UHT Sterilized Flavoured Milk under GST Tariff. Detailed Analysis: Issue 1: Classification of UHT Sterilized Flavoured Milk under GST Tariff Applicant's Submission: - The applicant, a manufacturer of UHT Sterilized Flavoured Milk marketed as 'Britannia Winkin’ Cow Thick Shake', argued that the product should be classified under Chapter 4, specifically under Tariff Heading 0402 or alternatively, Tariff Heading 0404. - The product consists primarily of milk (80-90%) and sugar (10-12%), with added flavors and stabilizers. - The applicant cited judicial precedents and the Food Safety and Standards Authority of India (FSSAI) regulations, which classify flavoured milk under 'Milk and dairy-based drinks' (Category 1.1). - The applicant argued that the product retains the essential character of milk and should be classified under Chapter 4 based on the General Rules for Interpretation of the Customs Tariff Act, 1975. Authority's Analysis: - The Authority examined the relevant Chapter Notes and Explanatory Notes of the Harmonized System of Nomenclature (HSN) for Chapter 4 and Chapter 22. - Chapter 4 covers 'Milk and cream, concentrated or containing added sugar or other sweetening matter' (CTH 0402) and 'Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included' (CTH 0404). - The product in question consists of standardized/toned milk (87-89%), sugar, stabilizers, and flavors, and is marketed as a ready-to-consume beverage. - The Explanatory Notes to HSN for CTH 0402 specifically exclude beverages consisting of milk flavoured with cocoa or other substances, classifying them under heading 22.02. - The product does not fall under CTH 0404 as it does not lack any natural milk constituents nor does it have any added natural milk constituents. - The Authority noted that the applicant had been classifying the product under CTH 2202 99 30, which covers 'beverages containing milk'. Ruling: - The Authority concluded that the product is appropriately classifiable under CTH 2202 99 30, which includes 'beverages containing milk'. - The classification under Chapter 4 was rejected as the product is a ready-to-consume beverage with a basis of milk, specifically excluded from Chapter 4 by the Explanatory Notes to HSN. - The reliance on FSSAI regulations for classification was dismissed, as the Customs Tariff aligned with HSN takes precedence for GST classification. Final Decision: - UHT Sterilized Flavoured Milk marketed under the brand name 'Britannia Winkin’ Cow Thick Shake' is not classifiable under Tariff Heading 0402 or 0404, but under CTH 2202 99 30.
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