2020 (8) TMI 449 - AAAR - GST

Classification of goods - portions of cooked chicken, mutton, fish, eggs etc - whether classifiable under HSN 1601 as they contain more than 20% by weight of meat? - challenge to AAR decision - HELD THAT - The moot question is thus whether the products for which classification has been sought contain more than 20% by weight of chicken meat or fish or eggs are claimed by the appellant, and if so whether they fall under chapter 16 - The WBAAR ought to have considered this point when admitting the products for classification. Food preparations containing more than 20% by weight of sausage meat, meat offal, fish etc. are included in chapter 16 (Chapter Note 2 to Chapter 16). According to chapter Note 2 to Chapter 16 and Explanatory Note to Chapter 16 the weight of meat ought to be considered at the stage when it is presented to the customer as foodstuff and not at the ingredients level before preparation of the food. It is clear from the test reports submitted during the course of hearing that the tests were conducted on the final marketable products and in each of the twenty eight products the quantity of chicken meat or fish or eggs is found to be more than 20% be weight. No arguments were put forward by the Respondents in contrary to the test reports - Further food preparation containing more than 20 % by weight of sausage meat, meat offal, fish etc. are included in Chapter 16 and the weight of meat ought to be considered at the stage when it is presented to the customer as foodstuff and not at the ingredient level before preparation of the food. The test reports clearly certifies that the final products except products of Sl.No. 7 and 26 to 28 contain more than 20% by weight of chicken and they are marketed as non-vegetarian confectionary or chicken based confectionary. Chicken cutlet cease to be a cutlet if chicken is removed and thus is clearly a meat based products. Thus it can be included that the chicken based products are classifiable under HSN 1601 and not under the residual entry of 2106. The products with main components of filling of chicken except products of Sl.No. 7 and 26 to 28 are classifiable under HSN 1601 - the decision of AAR modified.

Issues Involved:
1. Classification of products containing more than 20% by weight of meat under HSN 1601.
2. Consideration of all products listed by the appellant for advance ruling.
3. Validity of WBAAR's differentiation based on cooking methods.
4. Applicability of previous rulings and test reports.

Detailed Analysis:

1. Classification of Products Containing More Than 20% by Weight of Meat under HSN 1601:
The appellant, a manufacturer of various confectionery products with non-vegetarian fillings, sought classification under HSN 1601, arguing that their products contain more than 20% by weight of meat. The WBAAR initially ruled that these products, being primarily bread or flour-based, did not qualify as "food preparations based on meat" and thus could not be classified under HSN 1601. However, the appellate authority found that the test reports confirmed the products contained more than 20% by weight of meat, fish, or eggs at the final stage of presentation to customers. Consequently, it was determined that these products should indeed be classified under HSN 1601, except for items like Fish Spring Roll and Dimer Devil, which do not meet the criteria under the current HSN 1601 definition.

2. Consideration of All Products Listed by the Appellant for Advance Ruling:
The WBAAR initially considered only twenty-one baked products for ruling, excluding fried products. The appellate authority criticized this selective consideration, stating that all twenty-eight products should be evaluated together since they share the common criteria of having fillings prepared with meat, fish, or eggs as main ingredients. The authority decided to take up all products for discussion, emphasizing the need for a comprehensive approach.

3. Validity of WBAAR's Differentiation Based on Cooking Methods:
The WBAAR differentiated products based on their cooking methods (baking vs. frying), which the appellant argued was unjustified. The appellate authority agreed with the appellant, noting that the differentiation based on cooking methods was irrelevant for classification purposes. The key factor was the presence of more than 20% by weight of meat, fish, or eggs in the final product, regardless of the cooking method.

4. Applicability of Previous Rulings and Test Reports:
The appellant cited previous rulings and test reports to support their classification under HSN 1601. The appellate authority considered the decision in Venky’s Fast Foods, which classified products with more than 20% meat content under HSN 1601. Additionally, the test reports from National Collateral Management Services Ltd. confirmed that the final products contained more than 20% by weight of meat, fish, or eggs. The authority found these arguments and evidence compelling, leading to the conclusion that the products should be classified under HSN 1601, except for certain items that did not meet the criteria.

Conclusion:
The appellate authority modified the WBAAR's ruling, classifying the products with main components of chicken filling, except for specific items like Fish Spring Roll and Dimer Devil, under HSN 1601. The appeal was disposed of accordingly, emphasizing the importance of considering all products together and the final meat content in classification decisions.

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